If the Fed Believes That Real GDP Is Above Potential

Multiple Choice

If the Fed believes that real GDP is above potential GDP, it will

A) raise interest rates to shift the AD curve to the left and the IA line downward.
B) raise interest rates to shift the IA line downward.
C) raise interest rates to shift the AD curve to the left.
D) lower interest rates to shift the IA line downward.
E) lower interest rates to shift the AD curve to the left.