Multiple Choice
Suppose the Bank of Canada reduces the rate of inflation by 4 percentage points. Suppose, as well, that the sacrifice ratio has a value of 2. Which of the following describes what happens to GDP?
A) GDP increases by 8 percentage points
B) GDP decreases by 8 percentage points
C) GDP increases by one-half of a percentage point
D) GDP decreases by one-half of a percentage point
Correct Answer:
Verified
Correct Answer:
Verified
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