Problem
Consider an economy where velocity V equals 5, output grows at three percent a year, and money supply grows at five percent a year. What is the annual inflation rate?
In the quantity theory, we assumed that velocity was constant. In reality, the velocity of money varies across countries. Would you expect countries with high inflation to have higher or lower velocity than low-inflation countries? Justify your answer.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.