Everything Else Equal, If the Growth Rate of a Country

question 19

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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