If the Bank of Canada's Monetary Policy Rule Is R

Multiple Choice

If the Bank of Canada's monetary policy rule is r = 0.02 +
,the aggregate demand function for the economy is ADI = 5,000 + 0.8Y - 20,000r,current inflation equals 5% (0.05) ,and potential output (Y*) equals 20,000,then short-run equilibrium output equals __________,and inflation will eventually equal ________% when the economy returns to potential.

A) 17,000;3
B) 17,000;5
C) 18,000;5
D) 18,000;3
E) 19,000;4