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Scribs Scribs
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7 years ago
Suppose an economy falls into a recession. The central bank responds by rapidly increasing the money supply. Best for the central bank is the case where
A) a vertical IS curve produces the largest possible reduction in the interest rate as LM shifts to the right.
B) a vertical IS curve allows the interest rate to remain constant while real output rises back to the natural real GDP.
C) a vertical IS curve allows real GDP to remain constant while the interest rate falls.
D) a downward-sloping IS curve causes both the interest rate and real GDP to fall.
E) a downward-sloping IS curve causes a falling interest rate to stimulate consumption and investment demand.
Textbook 
Macroeconomics

Macroeconomics


Edition: 12th
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thecromthecrom
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