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Consider an Economy Without Any Supply Shocks

Question 35

Multiple Choice

Consider an economy without any supply shocks. If the expected inflation rate is 3 percent and the actual inflation rate is also 3 percent, then


A) the economy cannot be in a short- run equilibrium.
B) real GDP must be more than potential GDP.
C) real GDP must be less than potential GDP.
D) real GDP must be equal to potential GDP.
E) we can deduce nothing about the level of GDP.

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