If real GDP and the velocity of circulation do not change and the ...

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If real GDP and the velocity of circulation do not change and the quantity of money grows by 3 percent, then in the long the inflation rate is
 
  A) 0 percent.
  B) 3 percent.
  C) larger than 3 percent.
  D) -3 percent.
  E) More information is needed to answer the question.

Question 2

Referring to Figure 19.2, the effect of an increase in Japanese interest rates is represented by a movement from point
 
  A) d to c. B) b to a. C) c to d. D) d to a.

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Answer to Question 1

B

Answer to Question 2

A