If the Economy Is at Potential Output and the Bank

question 38

Multiple Choice

If the economy is at potential output and the Bank of Canada increases the money supply,in the short run real GDP will likely:

• A) fluctuate randomly.
• B) remain the same.
• C) decrease.
• D) increase.

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Definitions:

Excavation

The process of removing soil, rock, or other materials from a site to form an open hole or cavity.

Purchase Discount

A reduction in price granted by a supplier to a buyer for early payment of an invoice.

Freight-In

The cost associated with transporting goods into a warehouse or to the buyer, often included in the inventory cost.