Each of the following is a reason why a high level of real GDP should be associated with higher inflation and a higher price level except
A) when demand for products is higher than expected, firms raise their prices higher than they had previously planned.
B) when aggregate demand is higher than potential output, individual economic sectors and industries in . the economy quickly reach the limits of capacity.
C) high demand for labor gives workers more bargaining power, which they use to bargain for higher wages.
D) high demand for money raises the exchange rate.
Correct Answer:
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Q49: A decrease in the foreign real interest
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