Aggregate Demand and Supply Analysis

question 37

Multiple Choice

Aggregate Demand and Supply Analysis

-In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. Suppose that a combination of fiscal stimulus and recovery of consumer and business confidence shifts the IS and AD curves, as shown in the figure, while monetary policy sets the real interest rate at one percent. If the short-run aggregate supply curve is π = Y - 13, then the resulting values of output and inflation are ________.

• A) $12 trillion & 3 percent
• B) $13.5 trillion & 5 percent
• C) $9.75 trillion & 0 percent
• D) $13.5 trillion & 0 percent
• E) $12.5 trillion & 2 percent

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Definitions:

Exons

Regions within a gene that are kept after splicing and translated into protein.

Protein-coding Regions

Parts of the DNA or RNA composed of exons that are translated into proteins.

Anticodon

In a tRNA, set of three nucleotides that base-pairs with an mRNA codon.

tRNA

Transfer RNA, a type of RNA molecule that helps decode a messenger RNA (mRNA) sequence into a protein during protein synthesis.