Suppose the velocity of circulation (V) is constant. Annual growth rate of real GDP is 5%. The money supply grows by 14% per year. Use the quantity theory of money to calculate the inflation rate.
Given M: 14%, V: Constant, Y: 5%, P: ?
M * V = P * Y
14 * V = P * 5
P = 14/5, am I right?
If not, could you please lead me to the right answer..thanks