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  3. Study Set
    Macroeconomics
  4. Exam
    Exam 12: The Phillips Curve, Expectations, and Monetary Policy
  5. Question
    If Inflation Is Below the Central Bank's Targeted Inflation Rate
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If Inflation Is Below the Central Bank's Targeted Inflation Rate

Question 1

Question 1

Multiple Choice

If inflation is below the central bank's targeted inflation rate, the central bank will_________ the real interest rate which will lead to a _________ real GDP.


A) raise; higher.
B) lower; higher
C) lower; lower
D) raise; lower

Correct Answer:

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