In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing slower than potential real GDP?

Which of the following represents the opportunity cost of holding money?

A) the interest rate B) liquidity C) the rate of inflation D) none of the above

If the federal government tries to make fiscal policy sustainable by decreasing expenditure on government capital goods, private capital goods will become ________ productive, and this will result in ________ potential GDP

A) more; lower B) more; higher C) less; lower D) less; higher