What Would Be the Effect of a Decrease in the Real

question 18

Multiple Choice

What would be the effect of a decrease in the real interest rate and an increase in the expected inflation rate?

• A) Both changes would decrease aggregate demand.
• B) Both changes would increase aggregate demand.
• C) Both changes would increase short-run aggregate supply.
• D) Both changes would increase long-run aggregate supply.

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Definitions:

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Europe is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere, comprising multiple countries with diverse cultures, languages, and economies.

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The social class that came to own the means of production during modern capitalism, typically marked by wealth, property ownership, and the ability to employ labour.

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Organizations and systems that organize, oversee, and regulate the process of electing representatives in a democracy.