According to Real Business Cycle Theory, If the Bank of Canada

question 15

Multiple Choice

According to real business cycle theory, if the Bank of Canada increases the quantity of money when real GDP decreases, real GDP

• A)will increase but only temporarily.
• B)will increase permanently.
• C)and the price level will both be unaffected.
• D)will be unaffected, but the price level will rise.
• E)will decrease due to the inefficiencies introduced into production as a result.

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