Multiple Choice
Suppose there is a decrease in government spending. Such a fiscal policy action will cause:
A) the natural real interest rate to rise.
B) the natural real interest rate to fall.
C) ambiguous effects on the natural real interest rate.
D) no effect on the natural real interest rate.
E) the natural real interest rate falls when the nominal rate falls.
Correct Answer:
Verified
Correct Answer:
Verified
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