Approaching a business cycle peak, actual real GDP ________ natural real GDP, which causes inflation to ________

Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent, how do you expect inflation to change?

What will be an ideal response?

In real business cycle models, a change in willingness to work ________

A) is associated with productivity shocks B) causes a shift of the aggregate demand curve C) would violate the market-clearing assumption D) has no effect on potential output