In the IS-MP Framework, Starting from Macroeconomic Equilibrium at a 0

Essay

In the IS-MP framework, starting from macroeconomic equilibrium at a 0% output gap:
(a) a rise in the real interest rate will lead to _____ (a recession, inflation).
(b) a rise in the real interest rate will lead to _____ (a negative output gap, a positive output gap).
(c) a rise in the real interest rate will lead to _____ (lower sales forecasts, higher sales forecasts).