Assume the Economy Is Initially in Equilibrium Where Potential GDP

Multiple Choice

Assume the economy is initially in equilibrium where potential GDP equals real GDP.If the economy experiences a positive demand shock,increasing consumer optimism,and the Bank of Canada does not change its target short-term nominal interest rate,the ________ shifts to the right and the output gap will be ________.

A) IS curve; positive
B) IS curve; negative
C) MP curve; positive
D) MP curve; negative