Answered: Assume that the economy begins in long…

Assume that the economy begins in long run equilibrium and the central bank increases the target interest rate. In the long run, what happens to the price level?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 48CTQ: If households decide to save a larger portion of their income, what effect would this have on the...

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(20)

Assume that the economy begins in long run equilibrium and the central bank increases the target interest rate. In the long run, what happens to the price level?

Group of answer choices

(A) It goes down

(B) It stays the same

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