If f increases, then the Bank of Canada can keep output constant by reducing the real interest

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“If f increases, then the Bank of Canada can keep output constant by reducing the real interest rate by the same amount as the increase in financial frictions.” Is this statement true, false, or uncertain? Explain your answer.

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The Economics of Money Banking and Financial Markets

ISBN: 978-0321785701

5th Canadian edition

Authors: Frederic S. Mishkin, Apostolos Serletis

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