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If the Government Raises the Growth of Nominal GDP in Response

Question 113

Multiple Choice

If the government raises the growth of nominal GDP in response to a supply shock,


A) inflation will decelerate and unemployment will fall.
B) inflation will accelerate and unemployment will worsen.
C) employment can be maintained so long as expectations are unaffected by the supply shock.
D) None of these results follow an increase in the growth of nominal GDP.

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