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In the IS/MP Framework, When the Fed ________ the Federal

Question 108

Multiple Choice

In the IS/MP framework, when the Fed ________ the federal funds rate in the aftermath of the decline in housing prices, the ________ caused a(n) ________ in the real interest rate.


A) raised; higher inflation rate; fall
B) held constant; Okun effect; decline
C) lowered; financial friction; increase
D) manipulated; Fisher effect; increase
E) raised; unemployment rate; fall

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