If the Federal Reserve conducts a policy of keeping GDP above its full-employment level for a long period of time options: real interest rates will fall in the short run and in the long run nominal interest rates will rise to reflect higher inflation expectations real interest rates will fall and nominal interest rates will fall in the long run nominal interest rates will fall in the short and long run

Costs and wages start to rise, making firms cut back on creation until the full-business level of…

Answered: f the Federal Reserve conducts a policy…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the Federal Reserve conducts a policy of keeping GDP above its full-employment level for a long period of time

options:

	real interest rates will fall in the short run and in the long run
	nominal interest rates will rise to reflect higher inflation expectations
	real interest rates will fall and nominal interest rates will fall in the long run
	nominal interest rates will fall in the short and long run

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