Rate of inflation if the equation of exchange holds

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Assume the current money supply is $1000B and that the velocity of circulation 5. Real transactions are $500 billion and the price level index is 10. Next year, the Federal Reserve is expected to increase the money supply to $1200B and real transactions are expected to increase by $50 billion. If the velocity of money remains constant, what will be the rate of inflation if the equation of exchange holds each year?

Reference no: EM131817315

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