Suppose there are 1,200 units of money on an island, but the money grows by 3.56% per year. Islanders spend each unit of money an average of 2.3 times a year and this spending grows by 1.36%. The price level is at 34. GDP is expected to grow by 3.74%.

What is the level of inflation?

Answer rating: 100% (QA)

To calculate the level of inflation we need to consider the growth rate of the money supply M the gr... View the full answer