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The change in real GDP is not an accurate measure of the change in economic welfare because, for example
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- *a long run, the curve is vertical (change in price level does not affect quantity supplied)why?
- If there is shortage of loanable funds, then a. the supply for loanable funds shifts right and the demand shifts left. b. the supply for loanable funds shifts left and the demand shifts right. c. neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. d. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.
- Nominal Interest Rate = Real Interest Rate + Inflation