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Assume an economy's annual money velocity in circulation is 10.
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Assume an economy's annual money velocity in circulation is 10. Please answer the following two questions:

a. If the annual nominal GDP is $20 trillion, how much money supply are enough for money demand? 

b. In the view of monetarists (i.e. neoclassical view), if the annual economic growth rate is 5%, what should be the money supply increasing rate to maintain a low inflation rate as 2%?

Step-by-step answer

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Subject: Business, Economics

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