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Business, 21.09.2020 14:01 giulissaf

This question concerns the quantity theory of money (a) Write down the quantity equation. Identify all four variables. Then, indicate what happens to the level of prices of the money supply doubles?

(b) Rewrite the quantity equation in terms of growth rates. Solve for the rate of inflation. According to this model, what determines the long-run rate of inflation'?

(c) If real output grows 3 percent per year and the velocity of money is constant, what must the growth rate of money be to ensure that inflation is 5 percent?

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