1. Read Eye on Inflation on p. 351. Why did inflation increase during the 1970s? In which decades did velocity growth break the link between money growth and inflation? 2. Explain what causes...

In which decades did velocity growth break the link between money growth and inflation? 2. Explain what causes inflation. Why is it easier to predict the decade-average inflation rate than the inflation rate in a single year? 3. If the Fed doubled the quantity of money and nothing else changed, what would happen to the price level in the short run and the long run? What would happen to the inflation rate?