Facing an Inflationary Gap, an Increase in the Overnight Rate

question 58

Multiple Choice

Facing an inflationary gap, an increase in the overnight rate results in a(n)

• A) increase in both real GDP and the price level.
• B) increase in real GDP, but a fall in the price level.
• C) increase in real GDP, but no change in the price level.
• D) rise in the price level, but no change in real GDP.
• E) fall in both the price level and real GDP.

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Definitions:

Biomes

Large ecological areas on the Earth's surface, with flora and fauna adapting to their environment, such as forests, deserts, and tundras.

Trees

Perennial plants with an elongated stem, or trunk, supporting branches and leaves, playing a vital role in producing oxygen and providing habitats.

Taiga

Terrestrial biome that is a coniferous forest extending in a broad belt across northern Eurasia and North America.

Taiga

A biome characterized by coniferous forests, located in cold climates with short summers and long winters, primarily found in the northern hemisphere.