Aggregate Demand and Supply Analysis

question 11

Multiple Choice

Aggregate Demand and Supply Analysis
-In the figure above,assume that output is $10.5 trillion,while potential output is $12 trillion.If a fiscal stimulus package is implemented quickly,raising output to $12 trillion,while inflation remains constant at one percent,then the figure implies that the real interest rate will be ________ percent.

• A)1.5
• B)zero
• C)one
• D)0.5
• E)2.5

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Definitions:

Bank Statement Balance

The ending balance on a bank statement, representing the total amount of money in an account as recorded by the bank at the end of a given period.

Petty Cash Account

A small amount of cash kept on hand to pay for minor or incidental expenses.

Fund Replenishing

The process of adding money to a fund to restore its level after expenses have been incurred.

Making Payments

This process involves the transfer of funds from one party to another to settle a financial obligation or purchase.