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:

Genuine Imitation

An oxymoronic phrase often used sarcastically to describe a product that pretends to be something it is not.

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Laws established to regulate vehicles and traffic to ensure safety on roads for drivers, passengers, and pedestrians.

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A civil wrong that causes someone to suffer loss or harm resulting in legal liability for the person who commits the tortious act.