Unformatted text preview: d) people can make precise prediction on the rate of inflation. Answer: a). Note c) is a statement of the Fisher equation. a) is the assumption used to find out Fisher equation. 3. During the financial crisis, fed has increased money supply by 40 percent. If the velocity returns back to its pre-crisis level, real GDP increases by 10%, and fed does not adjust money supply, what would the price level likely: a) increase by 50% b) increase by 40% c) increase by 30% d) no change Answer: c)....
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This note was uploaded on 02/13/2012 for the course ECON 410 taught by Professor Hernandez-verme during the Spring '08 term at Texas A&M.
- Spring '08