Quiz 10 Solutions - ECONOMICS 3120 QUIZ 10 FALL 2008 DR WILLIE J BELTON JR 1 In then IS-LM models a decrease in the nominal money supply causes a

Quiz 10 Solutions - ECONOMICS 3120 QUIZ 10 FALL 2008 DR...

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ECONOMICS 3120 QUIZ 10FALL 2008 DR. WILLIE J. BELTON, JR. 10-24-2008 1. In then IS-LM models adecrease inthe nominal money supply causes adecreasein output. However in the medium run the decrease in output disappears asinterest rate return to the natural real rate of interest. Explain how the deviation ofthe real interest rate from the natural real rate of interest and the deviation ofoutput from the full employment output level are both representations ofthe same

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