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Question
Suppose the actual equilibrium federal funds rate is greater than the neutral federal funds rate. Given this information, we would expect that
A) real GDP will grow at a rate greater than the potential real GDP growth rate.
B) real GDP will grow at a rate less than the potential real GDP growth rate.
C) real GDP will grow at a rate equal to the potential real GDP growth rate.
D) the inflation rate will tend to increase.
Answer
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