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Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy
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The answer is option a- increase aggregate​ demand, increase prices and increase real GDP.

Suppose the economy currently has some underutilized resources. The Fed engages in expansionary monetary policy.
The impact of expansionary monetary policy will be to increase aggregate​ demand, increase prices and increase real GDP.

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