In the basic real business cycle model, where prices are fully flexible, shocks to the dynamic aggregate demand always lead to:   I. changes in real GDP. II. changes in inflation. III. changes in spending growth.   A) I only B) I and III only C) II only D) I, II, and III E) II and III only F) None of the above

Economics (MindTap Course List)
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ISBN:9781337617383
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Chapter16: Expectations Theory And The Economy
Section: Chapter Questions
Problem 14QP
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In the basic real business cycle model, where prices are fully flexible, shocks to the dynamic aggregate demand always lead to:

 

I. changes in real GDP.

II. changes in inflation.

III. changes in spending growth.

 

A) I only

B) I and III only

C) II only

D) I, II, and III

E) II and III only

F) None of the above

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