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If Restrictive Monetary Policy Leads to a Lower Price Level

Question 10

Multiple Choice

If restrictive monetary policy leads to a lower price level but leaves real output, employment, and real interest rates unchanged, then


A) real money balances must be unchanged
B) it must have been accompanied by expansionary fiscal policy
C) it must have been accompanied by restrictive fiscal policy
D) money is said to be neutral
E) both A) and D)

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