Question

The annual average percentage change in Real GDP is 2.3%, and the annual average percentage change in velocity is 1.1%. Using the monetary rule, what percentage change in the money supply will keep prices stable (on average)

Answer 1

the percentage change in the money supply that keep the price constant is 1.2%

Step-by-step explanation:

The computation of the percentage change in the money supply that keep the price constant is shown below:

= Annual average have percentage change in real GDP - annual percentage change in velocity

= 2.3% - 1.1%

= 1.2%

Hence, the percentage change in the money supply that keep the price constant is 1.2%

We simply applied the above formula so that the correct value could come

And, the same is to be considered