If the nominal money supply grows by 5%, real income falls by 2%, and the income elasticity of money demand is 0.8, then the inflation rate is
(a) 3.0%.
(b) 3.4%.
(c) 6.6%.
(d) 7.0%.
Answer: C
If the nominal money supply grows by 5%, real income falls by 2%, and the income elasticity of money demand is 0.8, then the inflation rate is
(a) 3.0%.
(b) 3.4%.
(c) 6.6%.
(d) 7.0%.
Answer: C
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