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Suppose the Economy Currently Has Some Underutilized Resources

Question 174

Multiple Choice

Suppose the economy currently has some underutilized resources. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to


A) increase aggregate demand, increase prices and increase real GDP.
B) increase aggregate demand, increase prices and decrease real GDP.
C) increase short-run aggregate supply, decrease in prices and decrease in real GDP.
D) increase short-run aggregate supply, decrease prices and increase real GDP.

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