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Question
Which of the following statements is correct?A. The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and inversely with potential output.
B. The long-run real interest rate varies inversely with changes in non-interest sensitive components of aggregate demand and inversely with potential output.
C. The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and directly with potential output.
D. The long-run real interest rate varies directly with changes in non-interest sensitive components of aggregate demand and does not vary with potential output.
Answer
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