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Question
Suppose the economy currently has an inflationary gap. The Fed engages in contractionary monetary policy. The impact of contractionary monetary policy will be to
A) increase short-run aggregate supply, decrease in prices and decrease in real GDP.
B) increase short-run aggregate supply, decrease prices and increase real GDP.
C) decrease aggregate demand, decrease prices, and increase real GDP.
D) decrease aggregate demand, decrease prices, and decrease real GDP.
Answer
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Related questions
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