In the country of Orcam, the velocity of money is constant. Real GDP grows by 6 percent per year, the money stock grows by 15 percent per year, and the nominal interest rate is 13 percent. Calculate the growth rate of nominal GDP.

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Business

Nathaniel Schroeder

10 April, 16:58

In the country of Orcam, the velocity of money is constant. Real GDP grows by 6 percent per year, the money stock grows by 15 percent per year, and the nominal interest rate is 13 percent. Calculate the growth rate of nominal GDP.

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Answers (1)

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Jaylee Roach · Answer 1

Answer:15%

Explanation:

Inflation growth = Money stock Growth - Real GDP growth

=15%-6%

=9%

Nominal GDP = Real GDP + Inflation growth

=6%+9%=15%