Aggregate Demand and Supply Analysis

Multiple Choice

Aggregate Demand and Supply Analysis
-In the figure above,assume that output is $10.5 trillion,while potential output is $12 trillion.If there is no policy intervention,then the figure implies that when output has reached $12 trillion,the real interest rate will be ________ percent,and the inflation rate will be ________ percent.

A) 1.5;one
B) one;zero
C) zero;minus 2
D) 0.5;minus one
E) 2.5;three