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As a Result of the Increased Deficit Associated with Discretionary

Question 1

Multiple Choice

As a result of the increased deficit associated with discretionary fiscal policy, _____


A) both the interest rate and real output fall.
B) both the interest rate and nominal output rise.
C) the interest rate falls and real output rises.
D) the interest rate rises and nominal output falls.
E) the natural rate of unemployment rises and the interest rate falls.

Correct Answer:

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