Suppose the nominal interest rate is 15% and the rate of inflation is 3%. The real interest rate is therefore

A rise in the price level produces ________ the potential GDP line

A) a movement downward along B) a leftward shift of C) a rightward shift of D) a movement upward along E) neither a shift of the potential GDP line nor a movement along

With an increase in the demand for a good, if prices are not allowed to increase:

A) social surplus will be maintained at maximum. B) there will be no incentive for firms to increase the quantity supplied of the good. C) a surplus will occur in the market. D) there will be an increase in overall efficiency in the market.