Exhibit 16-5 Money, investment and product markets
In Exhibit 16-5, a shift in aggregate demand from AD1 to AD2:
A. cannot raise real GDP because the economy is at full employment.
B. cannot raise real GDP because the aggregate supply curve is upward sloping at GDP2.
C. will raise real GDP because the economy is operating below the full-employment level.
D. will cause the interest rate to increase from i2 to i1.
Answer: C
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a. changes be indeterminate; fall b. fall; fall c. rise; fall. d. rise; changes be indeterminate e. none of the above.
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a. government securities. b. saving accounts. c. reserves. d. loans. e. checking account fees.