If real GDP falls and the nominal interest rate rises, then the equilibrium price level
A) Must fall.
B) Must rise.
C) Will fall if the effect of the decline in real GDP dominates.
D) Will fall if the effect of the increase in the nominal interest rate dominates.

Question

Quizplus · Accepted Answer

The Answer of If real GDP falls and the nominal interest rate rises, then the equilibrium price level
A) Must fall.
B) Must rise.
C) Will fall if the effect of the decline in real GDP dominates.
D) Will fall if the effect of the increase in the nominal interest rate dominates.

If Real GDP Falls and the Nominal Interest Rate Rises