1. Interest Rates and the Velocity of Money. When interest rates are high, people hold less money. How would this affect the velocity of money? 2. Using the Quantity Equation. If the growth rate of...

1. Interest Rates and the Velocity of Money. When interest rates are high, people hold less money. How would this affect the velocity of money?

2. Using the Quantity Equation. If the growth rate of money is 8 percent per year, annual inflation is 10 percent, and the growth rate of velocity is 2 percent per year, what is the growth rate of real and nominal output?