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19 April, 18:37

Which of the following changes will increase short-run output? Group of answer choices an increase in the parameter governing how aggressively monetary policy responds to inflation a decrease in the parameter governing how aggressively monetary policy responds to inflation an increase in the target rate of inflation a decrease in the target rate of inflation

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  1. 19 April, 18:43
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    The correct answer is letter "C": an increase in the target rate of inflation.

    Explanation:

    According to the Aggregate Demand Formula (Consumer Spending + Investment Spending + Government Spending + Exports-Imports) changes in its curve will be caused by changes in the inflation rate. The fact that the target increases will produce the interest rate to decrease and, as a result, the output will move in the opposite direction.
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