If the money supply is growing at a rate of 1010 percent per year, real GDP (real output) is growing at a rate of 11 percent p

Question

3 years ago

5

er year, and velocityLOADING... is constant, what will the inflation rate be? nothing%. (Enter your response as an integer value.)

1 answer:

Nat2105 [25] · Answer 1 · 2022-03-05T10:05:13+03:00

Answer:

The correct answer is 999%

Explanation:

We will use the Quantity Theory of Money to solve this simple question.

The Quantity Theory of Money equation is equal to:

ΔM X V = ΔP X ΔY

Where:

According to this theory, inflation is equal to:

ΔP = ΔM + V - ΔY

Replacing...

ΔP = 1010% + 0 - 11%

ΔP = 999%

So the price change, or inflation rate is 999%.

If the money supply is growing at a rate of 1010 percent per​ year, real GDP​ (real output) is growing at a rate of 11 percent p