Everything Else Equal, If the Growth Rate of a Country

question 92

Multiple Choice

Everything else equal, if the growth rate of a country exceeds its sustainable rate, the central bank:

• A) will keep interest rates low to keep the momentum.
• B) will now identify this new rate as the sustainable rate and try to maintain it.
• C) is likely to raise interest rates to slow the rate of growth.
• D) is likely to lower the interest rate thinking a slowdown is coming to offset this boom.

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