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Question
According to the theory based on rational expectations and flexible wages and prices,
A) fiscal policy has less effect on real GDP than monetary policy in the long run.
B) monetary policy has less effect on real GDP than fiscal policy in the long run.
C) neither fiscal nor monetary policy influence real GDP in the long run.
D) only the combination of discretionary fiscal policy and conservative monetary policy can affect real GDP in the long run.
Answer
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