Assume the Economy Is Initially in Equilibrium Where Potential GDP

question 43

Multiple Choice

Assume the economy is initially in equilibrium where potential GDP equals real GDP.If the economy experiences a positive demand shock,increasing consumer optimism,and the Bank of Canada does not change its target short-term nominal interest rate,the ________ shifts to the right and the output gap will be ________.

• A) IS curve; positive
• B) IS curve; negative
• C) MP curve; positive
• D) MP curve; negative

---

Definitions:

Lightning Arrestor

A protective device that diverts surge voltages from lightning strikes away from electronic equipment or electrical installations, minimizing damage.

Lightning Discharge

A sudden electrostatic discharge during a thunderstorm between electrically charged regions of a cloud, between two clouds, or between a cloud and the ground.

Protected Object

An item or entity safeguarded by specific measures against potential threats or damage.

Current Flows

The movement of electric charge carriers, such as electrons, through a conductor, creating an electric current.