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With the Presence of a Short-Run Trade-Off Between Inflation and Unemployment

Question 8

Multiple Choice

With the presence of a short-run trade-off between inflation and unemployment, changes in international conditions that caused domestic aggregate demand to increase at every price level,


A) prices and GDP would climb.
B) prices would climb and GDP would fall.
C) prices would climb but GDP would remain below its potential.
D) prices would fall and GDP would remain at its potential.
E) prices would climb to maintain GDP at its potential.

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