Aggregate Demand and Supply Analysis

question 5

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 there is no policy intervention,we should expect ________.

• A)rightward shifts of IS & AD,so that both output and inflation rise
• B)a decrease in inflation to shift the MP curve,raising the real interest rate
• C)declines in both the inflation rate and the real interest rate as output rises
• D)a decrease in inflation to shift the AD curve,causing output to rise
• E)none of the above

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Definitions:

Input Energize

refers to the condition in electrical or electronic circuits where an input signal or power source is applied, activating a component or process.

Dividend

A portion of a company's earnings that is distributed to shareholders, typically in the form of cash or additional stock.

Interest Rate

Borrowers are subject to a charge, defined as a percentage of the principal, for the usage of assets from lenders.

Interest Rate

The proportion, typically expressed as a percentage, that is charged by lenders to borrowers for the use of their money.