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If the Intersection of the IS Curve with the Horizontal

Question 49

Multiple Choice

If the intersection of the IS curve with the horizontal axis comes at a level of output below the natural level of output,the Fed


A) can easily bring the economy back to the full-employment level of output.
B) loses control of the economy.
C) must use contractionary model policy to correct economic problem.
D) must decrease money supply and ignore interest rates.

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