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:

Hallucination

A false perception or sensation in a conscious individual, seemingly real but created by the mind, without an external stimulus.

Paranoia

A mental condition characterized by delusions of persecution, unwarranted jealousy, or exaggerated self-importance.

Delusion

A strongly held belief despite superior evidence to the contrary, often found in psychiatric conditions.

DSM-5 Classification

The diagnostic criteria for mental disorders as outlined in the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders.