Question: Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 5 percent each year. If velocity grows 2 percent this year

Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 5 percent each year. If velocity grows 2 percent this year and Real GDP grows 2 percent, the price level will __________ by __________ percent.

a.rise; 6b.rise; 3c.rise; 2d.fall; 5e.fall; 3

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