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Suppose velocity and output are constant, both the quantity theory and Fisher effect hold. If the nominal interest rate is 6% and inflation is 2.5%, then

a. the real interest rate is 8.5%

b. the real interest rate is 2.5%

c. the money supply growth rate is 6%

d. the money supply growth rate is 2.5%

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Darryn D'Souza
Darryn D'SouzaLv10
16 Feb 2021

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