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Suppose the Economy Is Producing at the Natural Rate of Output

Question 86

Multiple Choice

Suppose the economy is producing at the natural rate of output. An open market sale of bonds by the Bank of Canada will cause ________ in real GDP in the short run and ________ in the inflation rate in the short run, everything else held constant.


A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease

Correct Answer:

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