Given the Usual Lucas Supply Curve and Aggregate Demand Positively

question 27

Multiple Choice

Given the usual Lucas supply curve and aggregate demand positively correlated with the real money supply, a sudden reduction in the money supply should cause

• A) output to fall while prices remain the same.
• B) output to fall while prices increase.
• C) output to rise while prices increase.
• D) output to fall while prices fall.
• E) output to remain the same while prices decline.

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