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Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the Economy Starts at Point B.Fed

Question 64

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Exhibit 16-2
Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD<sub>1</sub>.A recession is likely if the economy operates under __________ assumptions,which include wage and price __________. A) new classical; flexibility B) new classical; inflexibilities C) new Keynesian; flexibility D) new Keynesian; inflexibilities
-Refer to Exhibit 16-2.Suppose the economy starts at point B.Fed monetary policy shifts the AD curve to AD1.A recession is likely if the economy operates under __________ assumptions,which include wage and price __________.


A) new classical; flexibility
B) new classical; inflexibilities
C) new Keynesian; flexibility
D) new Keynesian; inflexibilities

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