Suppose Real and Potential GDP Are Initially Equal

question 59

Multiple Choice

Suppose real and potential GDP are initially equal. If the Fed increases the target inflation rate, then in the long run we would expect

• A)a higher real rate of interest.
• B)lower real interest rates.
• C)no change in the real rate of interest.
• D)a decline in unemployment.
• E)a decline in potential GDP.

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Definitions:

Management

The process of planning, organizing, leading, and controlling resources in order to achieve the goals of an organization.

Available Resources

The tangible and intangible assets that a company or an individual possesses, which can be utilized to achieve goals, including financial, human, technological, and natural resources.

Managed

The act of overseeing or controlling business operations and decisions to achieve specific objectives.

Cease To Exist

A term indicating that an entity or condition has completely stopped occurring or functioning.