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Question: 2 assuming the velocity of money is constant nominal money...

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2. Assuming the velocity of money is constant, nominal money supply is growing at 12 percent a year and real incomes are growing at 5 percent a year: a) What is the inflation rate in this economy, all else the same? b) What would happen to the inflation rate if real incomes were growing faster? What if the money supply grew faster? c) If the inflation rate leads to an increase in the nominal interest rate, how does this affect the velocity of money? Would the inflation rate increase or decrease? d) ldentify two reasons why the velocity of money might change. Explain in two lines each

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