Suppose velocity was constant, thenominalinterest rate averaged 1%,realoutput grew at an average annual rate of 2.5%, and the money supply grew at an average annual rate of 5%. According to the Quantity Theory of Money and the Fisher effect,

Group of answer choices

inflation averaged 2.5% per year and the real interest rate was -1.5%.

inflation averaged 7.5% per year and the real interest rate was 8.5%.

inflation averaged 7.5% per year and the real interest rate was -6.5%.

inflation averaged 2.5% per year and the real interest rate was 3.5%.