Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which two real variables do not depend on monetary policy in long-run equilibrium? A)Y_t and π_t B)i_t and r_t C)E_tπ_{t + 1} and π_t D)Y_t and r_t

Question

Quizplus · Accepted Answer

In the long-run equilibrium, real GDP (Y_t) and the real interest rate (r_t) are determined by real factors such as technology and preferences, and are not influenced by monetary policy.

Of the Five Endogenous Variables in the Dynamic Model of Aggregate