Aggregate Demand and Supply Analysis

question 60

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.The equilibrium real interest rate is ________ percent.

• A)3
• B)one
• C)2.5
• D)2
• E)zero

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Definitions:

Placebo Effect

A phenomenon where a person experiences a beneficial effect from a treatment due to their expectations, rather than from the treatment itself.

Positive Expectations

The anticipation or belief that one will experience positive outcomes in the future.

Placebo Effects

Positive changes in a patient's condition following a treatment that has no therapeutic effect, due to the patient's belief in the treatment.

Double-blind Procedure

An experimental method where neither the participants nor the experimenters know who is receiving a particular treatment.