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Assume the Keynesian Transmission Mechanism Is Operational and the Economy

Question 124

Multiple Choice

Assume the Keynesian transmission mechanism is operational and the economy is currently operating in the horizontal portion of the AS curve.If the money supply increases and the demand for money curve is downward sloping and investment is interest ____________,then Real GDP will ___________________.


A) sensitive; rise
B) insensitive; remain unchanged
C) sensitive; remain unchanged
D) insensitive; rise
E) a and b

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