If the quantity of money grows at 13 percent a year, the velocity of circulation Question list K increases at a rate of 3 percent per year, and potential GDP grows at 5 percent a year, what is the inflation rate in the long run? . . . O Question 17 The inflation rate in the long run is percent a year. Question 18What is the quantity theory of money? Define the velocity of circulation and explain how it is Question \"St I6 measured. E} 0 Question 17 The quantity theory of money is the proposition that when , an increase in the quantity of money brings percentage increase in the price level. Question 18 C) A. real GDP exceeds potential GDP; a greater (:3 B. real GDP equals potential GDP; a smaller C) C. an inationary gap exists; a greater QueStlon 19 (:3 D. real GDP exceeds potential GDP; an equal C) E. real GDP equals potential GDP; an equal Question 20 The velocity of circulation is the average number of times in a year that each dollar of money gets used to buy The formula used to measure the velocity of circulation, V, is , where P is the price 0 Question 21 level, Y Is real GDP. and M IS the quantity of money. C) A. foreign goods and services; V = P+ M x Y . (:3 B. final goods and services; V = (P x Y) + M C) Question 22 _ _ L.) C. final goods and serVIces; V = P+ YX M C) D. all goods and services and assets; V = PX Y+M Question 23 c: :1 E. stocks and bonds; v = (P+ Y) x M C) Question 24