In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If there is no policy intervention, we should expect ________
A) rightward shifts of IS & AD, so that both output and inflation rise
B) a decrease in inflation to shift the MP curve, raising the real interest rate
C) declines in both the inflation rate and the real interest rate as output rises
D) a decrease in inflation to shift the AD curve, causing output to rise
E) none of the above
C
Economics
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A graph of total fixed cost
a. is a downward sloping line. b. is a straight horizontal line. c. is an upward sloping line. d. has a U-shape.
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The derived demand curve for loans slopes downward because as interest rates
A. fall, future income becomes less valuable. B. fall, investors develop pessimistic expectations. C. fall, future income becomes more valuable. D. rise, investors become pessimistic.
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