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Suppose That a Severe Shock That Decreases Investment Demand Hits

Question 33

Multiple Choice

Suppose that a severe shock that decreases investment demand hits the United States. Which of the following can we expect to occur according to the real business cycle model?


A) The real wage rate will rise.
B) The real interest rate will fall.
C) The Fed will lower the federal funds rate.
D) The structural deficit will increase.

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