Multiple Choice
If the economy is initially at potential GDP and people correctly anticipate an increase in inflation so that their money wage rate adjusts immediately, then
A) neither the price level nor real GDP increase.
B) both the price level and real GDP increase.
C) only the price level rises with no change in real GDP.
D) only real GDP increases with no change in the price level.
Correct Answer:
Verified
Correct Answer:
Verified
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