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Suppose the Economy Is Initially in Short-Run Equilibrium and the Bank

Question 90

Multiple Choice

Suppose the economy is initially in short-run equilibrium and the Bank of Canada decreases the nominal money supply.If the price level remains constant,real GDP will ________ relative to potential GDP and the real interest rate will ________.


A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Correct Answer:

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