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The Policy Ineffectiveness Theorem States That, in an Economy Where

Question 32

Multiple Choice

The policy ineffectiveness theorem states that, in an economy where expec- tations are rational, an anticipated increase in the money supply results in


A) an increase in output and the price level.
B) an increase in output but no increase in the price level.
C) no increase in output or the price level.
D) no increase in output and the price level.
E) a decrease in output and an increase in the price level.

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