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In the Short Run, Any Rise in the Real Exchange

Question 37

Multiple Choice

In the short run, any rise in the real exchange rate, EP/P*, will cause


A) an upward shift in the aggregate demand function and a reduction in output.
B) an upward shift in the aggregate demand function and an expansion of output.
C) a downward shift in the aggregate demand function and an expansion of output.
D) an downward shift in the aggregate demand function and a reduction in output.
E) an upward shift in the aggregate demand function but leaves output intact.

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