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In the Long Run, When Interest Rates Are Set by the Spending

Question 63

Multiple Choice

In the long run, when interest rates are set by the spending balance and GDP is set by potential GDP, money is neutral


A) even if inflation reduces the cost of capital through the workings of the tax system.
B) even if inflation makes physical capital more attractive than financial assets.
C) even if inflation creates inefficiency in the monetary system.
D) even if inflation's variability makes business planning difficult at best.
E) only if none of the above apply.

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