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In the Basic Model with an AD and LRAS Curve

Question 238

Multiple Choice

In the basic model with an AD and LRAS curve only, if spending growth is 10% and the Solow growth rate falls from 5% to 3%, then inflation will:

A) decrease from 7% to 5%.
B) increase from 5% to 7%.
C) decrease from 13% to 8%.
D) increase from 8% to 13%.

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