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Take a look at the picture Assume the economy is initially in equilibrium where potential GDP is less than real GDP. If the expected ination

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Assume the economy is initially in equilibrium where potential GDP is less than real GDP. If the expected ination rate, the term structure effect, and the default - risk premium are constant, in the Fed's target short - term nominal interest rate will shift up the MP curve which will result in real GDP 0 A. an increase; falling O B. a decrease; rising O c. a decrease; falling O D. an increase; rising

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