Suppose that,in an economy,ADI = 5,000 + 0.75 Y - 10,000r,and the central bank acts according to the following monetary policy rule:
If inflation is 2%,the central bank will set a real interest rate of ________%,and short-run equilibrium output will be equal to _________.
A) 1;20,000
B) 2;20,000
C) 2;19,200
D) 3;18,800
E) 3;18,000

Question

Suppose that,in an economy,ADI = 5,000 + 0.75 Y - 10,000r,and the central bank acts according to the following monetary policy rule: 
If inflation is 2%,the central bank will set a real interest rate of ________%,and short-run equilibrium output will be equal to _________.
A) 1;20,000 
B) 2;20,000 
C) 2;19,200 
D) 3;18,800 
E) 3;18,000

Quizplus · Accepted Answer

The Answer is D

Suppose That,in an Economy,ADI = 5,000 + 0