1. According to figures from the International Monetary Fund, the average real GDP growth rate for advanced economies was 1.7% per year between 2003-2012, while the average growth rate was 6.6% for emerging markets and developing economies for the same period. Based on factors affecting the long-term growth rate, explain why we observe such a difference.

Reference:International Monetary Fund (2021), World Economic Outlook: Managing Divergent Recoveries, April 2021. https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world-economic-outlook-april-2021

2.Justify the following statement based on AD-AS model and quantity theory of money. "A higher rate of increase in money supply than the growth rate of real potential GDP may lead to a growth of GDP faster than its potential rate in the short run, but it is no longer true in the long run. In the long run, the only response to a higher growth in money supply is a higher inflation rate."

Please answer the above two questions with detailed explanations, thank you.