Evidence shows that the quantity equation is correct over the long run, which implies that the growth rate of the velocity of money causes the level of prices to change. growth rate of GDP causes most of the change in the money supply. growth rate of the money supply determines the rate of inflation. growth rate of inflation leads to growth in GDP.

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06-12-2022
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Evidence shows that the quantity equation is correct over the long run, which implies that the growth rate of the velocity of money causes the level of prices to change. growth rate of GDP causes most of the change in the money supply. growth rate of the money supply determines the rate of inflation. growth rate of inflation leads to growth in GDP.

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jaspreetsharma jaspreetsharma · Answer 1 · 2022-12-13T10:56:57+01:00

The correct option is C) the growth rate of the money supply determines the inflation rate. The equation states that since output and money velocity are both constant over the long run, the level of prices is determined by the money supply.

Gross domestic product, also known as GDP, is among the most popular. It is frequently quoted in statements by countries, federal reserve, and the corporate sector as well as in newspapers, on news programs, and in publications.It is currently commonly used as a yardstick for assessing the strength of both national and international economies. The Wholesale Price Index's (WPI) average fluctuation in value is defined as inflation. It properly assesses how a bundle of products & services' prices fluctuate over the duration of a year. To estimate growth rates, divide the gap here between starting and ending readings for the period under study by the base value. The most common time frames for growth rates are annually, quarterly.

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