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If Persistent Inflation Was Due to Declines in Long-Run Aggregate

Question 231

Multiple Choice

If persistent inflation was due to declines in long-run aggregate supply, what pattern would be observed?


A) Increases in the price level would occur simultaneously with decreases in real GDP.
B) Increases in the price level would occur simultaneously with increases in real GDP.
C) Only prices of goods would increase; prices of services would remain constant.
D) Only prices of services would increase; prices of goods would remain constant.

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