AP Macroeconomics Quiz
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LONG-RUN CONSEQUENCES OF STABILIZATION POLICIES
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Based on the money supply growth shown, assume long-run real GDP growth is stable at 2% and velocity is stable. Which statement best describes the long-run effect of increasing sustained money supply growth from 6% to 10%?
Table: Money Growth Change (Economy L)
| Variable | Initial | New sustained rate |
|---|---|---|
| Money supply growth | 6% | 10% |
| Real GDP growth | 2% | 2% |
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