In a Model with Short-Run Trade-Offs Between Inflation and Unemployment

question 3

Multiple Choice

In a model with short-run trade-offs between inflation and unemployment, real GDP is determined in the short run by

• A) the intersection of a vertical potential GDP schedule and the current price level.
• B) the intersection of a horizontal potential GDP schedule with the current price level.
• C) the intersection of a downward-sloping aggregate demand curve and the current price level.
• D) the intersection of a downward-sloping aggregate demand curve and a vertical potential GDP schedule.
• E) none of the above.

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