Aggregate Demand and Supply Analysis
-In the figure above,assume that output is $10.5 trillion,while potential output is $12 trillion.If there is no policy intervention,we should expect ________.
A)rightward shifts of IS & AD,so that both output and inflation rise
B)a decrease in inflation to shift the MP curve,raising the real interest rate
C)declines in both the inflation rate and the real interest rate as output rises
D)a decrease in inflation to shift the AD curve,causing output to rise
E)none of the above

Question

Aggregate Demand and Supply Analysis 
-In the figure above,assume that output is $10.5 trillion,while potential output is $12 trillion.If there is no policy intervention,we should expect ________.
A)rightward shifts of IS & AD,so that both output and inflation rise 
B)a decrease in inflation to shift the MP curve,raising the real interest rate 
C)declines in both the inflation rate and the real interest rate as output rises 
D)a decrease in inflation to shift the AD curve,causing output to rise 
E)none of the above

Quizplus · Accepted Answer

The Answer of Aggregate Demand and Supply Analysis 
-In the figure above,assume that output is $10.5 trillion,while potential output is $12 trillion.If there is no policy intervention,we should expect ________.
A)rightward shifts of IS & AD,so that both output and inflation rise 
B)a decrease in inflation to shift the MP curve,raising the real interest rate 
C)declines in both the inflation rate and the real interest rate as output rises 
D)a decrease in inflation to shift the AD curve,causing output to rise 
E)none of the above