Suppose We Assume

Multiple Choice

Suppose we assume
,
,
,and the real interest rate falls to
) The economy would:

A) remain at its long-run equilibrium.
B) move from its long-run equilibrium to 1 percent below its potential.
C) move from 1 percent below its potential to its longrun equilibrium.
D) move from its long-run equilibrium to 1 percent above its potential.
E) none of the above