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2. Inflation is a tax because as the government the price level ________ the quantity of money, , and the purchasing power of households' money A. increases; rises; increases B. decreases; rises; decreases c increases; rises; decreases D. does not change; rises; increases E. decreases; falls; decreases 6. The velocity of circulation grows at 1 percent and real GDP grows at 3 percent. If the quantity of money grows at 2 percent, the inflation rate is A. 10 percent. B. 4 percent. C. zero. D. 8 percent. E. 2 percent. 7 When the nominal interest rate falls, there is A. an upward movement along the demand for money curve. B. no movement along the demand for money curve and the curve does not shift. C. a leftward shift of the demand for money curve. D. a downward movement along the demand for money curve. E. a rightward shift of the demand for money curve. 30. The required reserve ratio is 10 percent and Charlie deposits 53,000 in her checking account. The bank must A. decrease reserves by $300. B. increase reserves by $300. C. decrease reserves by $3,000. D. increase reserves by $3,000. E. not change its reserves until Charlie decides to withdraw her funds. 26. If real GDP grows at 4 percent, the quantity of money grows at 6 percent, and velocity does not change, then in the long run the inflation rate is A. 10 percent. B. 4 percent. C. 1.5 percent. D. 2 percent. E. 6 percent