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QUESTION

Suppose that velocity and output are constant and that the quantity theory and the fisher effect both hold. what happens to inflation and real interest rates when the money supply growth rate increase

Suppose that velocity and output are constant and that the quantity theory and the fisher effect both hold. what happens to inflation and real interest rates when the money supply growth rate increases from 5 percent to 10 percent? select one:

a. inflation increases by 5%, real interest rates decrease by 5%

b. both increase by 5%

c. both stay the same

d. inflation increases by 5%, real interest rates stay the same

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