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Assume that prices and wages adjust rapidly so that the markets for labour, goods, and assets are always in equilibrium. What are the effects of
Assume that prices and wages adjust rapidly so that the markets for labour, goods, and assets are always in equilibrium. What are the effects of each of the following on output, the real interest rate, and the current price level?
a. A temporary increase in government purchases.
b. A reduction in expected inflation.
c. A temporary increase in labour supply.
d. An increase in the interest rate paid on money
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