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Of the Five Endogenous Variables in the Dynamic Model of Aggregate

Question 25

Multiple Choice

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?


A) Yt, rt, and it
B) Yt, it, and Etπt + 1
C) πt, it, and Etπt + 1
D) rt, πt, and it

Correct Answer:

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