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Suppose the Economy Is at Full Employment

Question 89

Multiple Choice

Suppose the economy is at full employment. An increase in the money supply will _______ in the short run and _______ in the long run.


A) increase interest rates, increase the price level
B) decrease interest rates, increase the price level
C) decrease interest rates, decrease the price level
D) increase interest rate, have no effect on the price level.

Correct Answer:

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