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-In the New Classical Model in the Figure Above, the Initial

Question 25

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-In the new classical model in the figure above, the initial impact of an unanticipated monetary contraction ________. A) increases output from Y<sub>n</sub> to Y<sub>2</sub>, and the inflation rate from P<sub>1</sub> to P<sub>2</sub> B) decreases output from Y<sub>n</sub> to Y<sub>4</sub>, and the inflation rate from P<sub>3</sub> to P<sub>4</sub> C) does not change output and increases the inflation rate from P<sub>1</sub> to P<sub>3</sub> D) does not change output and decreases the inflation rate from P<sub>3</sub> to P<sub>1</sub>
-In the new classical model in the figure above, the initial impact of an unanticipated monetary contraction ________.


A) increases output from Yn to Y2, and the inflation rate from P1 to P2
B) decreases output from Yn to Y4, and the inflation rate from P3 to P4
C) does not change output and increases the inflation rate from P1 to P3
D) does not change output and decreases the inflation rate from P3 to P1

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