If Restrictive Monetary Policy Leads to a Lower Price Level

question 10

Multiple Choice

If restrictive monetary policy leads to a lower price level but leaves real output, employment, and real interest rates unchanged, then

• A)real money balances must be unchanged
• B)it must have been accompanied by expansionary fiscal policy
• C)it must have been accompanied by restrictive fiscal policy
• D)money is said to be neutral
• E)both A)and D)

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