f the Federal Reserve conducts a policy of keeping GDP above its full-employment level for a long period of time options: real interest rates will fall in the short run and in the long run nominal interest rates will rise to reflect higher inflation expectations real interest rates will fall and nominal interest rates will fall in the long run nominal interest rates will fall in the short and long run
f the Federal Reserve conducts a policy of keeping GDP above its full-employment level for a long period of time options: real interest rates will fall in the short run and in the long run nominal interest rates will rise to reflect higher inflation expectations real interest rates will fall and nominal interest rates will fall in the long run nominal interest rates will fall in the short and long run
Chapter7: Inflation
Section: Chapter Questions
Problem 14SQ
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Question
If the Federal Reserve conducts a policy of keeping
options:
|
real interest rates will fall in the short run and in the long run |
|
nominal interest rates will rise to reflect higher inflation expectations |
|
real interest rates will fall and nominal interest rates will fall in the long run |
|
nominal interest rates will fall in the short and long run |
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