Consider an Economy Without Any Supply Shocks

question 57

Multiple Choice

Consider an economy without any supply shocks. If the expected inflation rate is 3 percent and the actual inflation rate is also 3 percent, then

• A)the economy cannot be in a short- run equilibrium.
• B)real GDP must be more than potential GDP.
• C)real GDP must be less than potential GDP.
• D)real GDP must be equal to potential GDP.
• E)we can deduce nothing about the level of GDP.