1. it is sometimes suggested that the federal reserve should try to achieve zero inflation. assume that velocity is constant. true or false?
2. in order to achieve this zero-inflation goal, the rate of money growth must equal zero. true or false?

False

Explanation:

This relates to quantity equation of money.

Let M = Quantity of Money.

V = Velocity

Nominal Value = P * Y

The relationship between the above is: M×V=P×Y .

Where Inflation, P is constant.

The constant velocity, V will reduce the inflation to 0 which will also require that the variables M and Y be proportionally related.

So, the money growth rate must equal the growth rate of real output

answer: g

explanation: g

c

explanation: