单选题 If the velocity of money is increasing at a rate of 1 percent per year and real GDP is increasing at 2%, a 4% increase in the money supply will lead to:

A. 6% inflation.
B. 5% inflation.
C. 3% inflation.

【正确答案】 C

【答案解析】The inflation rate is calculated as the rate of change in the money supply plus the change in the velocity of money less the change in real GDP. Inflation equals to 3% ( = 1%+4%-2% ).