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Suppose That Aggregate Demand Were to Change, Over the Course

Question 26

Multiple Choice

Suppose that aggregate demand were to change, over the course of a year during which potential GDP was frozen at $10,000, from Y = 11,000 - 10P to Y = 11,100 - 10P. The rate of inflation that would occur in the flexible price long-run growth model is


A) 10 percent.
B) 15 percent.
C) 5 percent.
D) 0 percent.

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