Suppose We Assume , and the Real Interest Rate

question 61

Multiple Choice

Suppose we assume , and the real interest rate rises to
) In this scenario of the IS curve, the economy would, in the short run:

• A) remain at its long-run equilibrium.
• B) move from 1 percent below its potential to its long-run equilibrium.
• C) move from its long-run equilibrium to 1 percent above its potential.
• D) move from its long-run equilibrium to 1 percent below its potential.
• E) have increased output.

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