Take a look at the IS-MP-PC model shown here. If a spending shock causes the IS curve to shift right until the output gap is 0%, what will the new equilibrium real interest rate be?

A)5%.
B)3%.
C)-4%.
D)0%.

Question

Take a look at the IS-MP-PC model shown here. If a spending shock causes the IS curve to shift right until the output gap is 0%, what will the new equilibrium real interest rate be?

A)5%. 
B)3%. 
C)-4%. 
D)0%.

Quizplus · Accepted Answer

The Answer of Take a look at the IS-MP-PC model shown here. If a spending shock causes the IS curve to shift right until the output gap is 0%, what will the new equilibrium real interest rate be?

A)5%. 
B)3%. 
C)-4%. 
D)0%.

Take a Look at the IS-MP-PC Model Shown Here