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26 July, 01:11

In the long run, money demand and money supply determine

a. the price level but not the real interest rate.

b. the price level and the real interest rate.

c. the real interest rate but not the price level.

d. neither the price level nor the real interest rate.

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Answers (1)
  1. 26 July, 04:28
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    Money demand refers to how much wealth people want to hold in liquid form and depends on the price level and the interest rate.

    In the long run, money demand and money supply determine the price level but not the real interest rate.
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