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In the Long Run, You Would Expect Contractionary Monetary Policy

Question 54

Multiple Choice

In the long run, you would expect contractionary monetary policy to


A) leave real interest rates and real GDP unchanged even as prices fall.
B) reduce real interest rates and real GDP despite constant prices.
C) reduce real interest rates, prices, and real GDP all at the same time.
D) increase real interest rates while prices and real GDP slump.
E) none of the above.

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