Which Set of Changes Is Definitely Predicted to Lower Real

question 84

Multiple Choice

Which set of changes is definitely predicted to lower Real GDP in the short run?

• A) Interest rates rise and wage rates fall.
• B) Interest rates rise and there is a beneficial supply shock.
• C) Interest rates rise and labor productivity increases.
• D) Interest rates rise and individuals expect lower (future)incomes.
• E) c and d

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Definitions:

Exchange Rates

The value of one currency for the purpose of conversion to another, affecting international trade and economic relations.

Demonetization

The act of stripping a currency unit of its status as legal tender, usually to replace it with new notes or coins.

Political Instability

A situation where a country experiences changes in its political environment that can affect its government's ability to govern effectively.

Depreciation

A decrease in the value of one currency relative to another currency.