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Unformatted text preview: The income effect is the- increase in the real and nominal interest rates caused by an increase in GDP In the equation of exchange, the average number of times a dollar is used to purchase a final good or service is the __________ of money- Velocity Suppose the economy starts off producing Natural Real GDP. Next, aggregate demand rises, ceteris paribus. As a result, the price level rises in the short run. In the long run, when the economy has moved back to producing Natural Real GDP, the price level will be- higher than it was in short-run equilibrium MV in the equation of exchange is also defined as- total expenditures Which of the following statements is true- Nominal interest rate = real interest rate + expected inflation rate...
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This note was uploaded on 05/09/2010 for the course ECN 101 taught by Professor Bob during the Spring '10 term at Acadia.
- Spring '10