Figure 13.1 -The Aggregate Demand Curves in Figure 13.1 Have a Positively-Sloped

Multiple Choice

Figure 13.1
-The aggregate demand curves in Figure 13.1 have a positively-sloped portion.The reason this can happen is ________.

A) sloppy editing
B) the monetary policy response to declining inflation causes the real interest rate to fall,which causes output to rise
C) a sudden increase in potential output
D) changes in expected inflation cause the real interest rate to change in the opposite direction
E) rising inflation causes financial frictions to increase