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Suppose That a Severe Shock That Decreases the Demand for Loanable

Question 71

Multiple Choice

Suppose that a severe shock that decreases the demand for loanable funds hits Canada. Which of the following can we expect to occur according to real business cycle theory?


A) The real interest rate will fall.
B) People will work fewer hours.
C) The real wage rate will fall.
D) The demand for loanable funds will decrease.
E) All of the above are true.

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