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An increase in the growth rate of the nominal money supply results in _________.

  1. A
    Lower rate of inflation
  2. B
    Higher rate of inflation
  3. C
    Lower interest rates
  4. D
    Currency appreciation

Solution & Step-by-step Explanation

According to the quantity theory of money, an increase in the growth rate of the nominal money supply leads to an excess supply of money relative to the demand for goods and services. This drives up aggregate prices, leading directly to a higher rate of inflation.

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An increase in the growth rate of the nominal money supply results in _________.
A
Lower rate of inflation
B
Higher rate of inflation
C
Lower interest rates
D
Currency appreciation

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