Suppose We Assume That Initially $\bar { a } = 0 , \bar { b } = 0.5 , R _ { t } = \bar { r } = 5 \%;$

Multiple Choice

Suppose we assume that initially $\bar { a } = 0 , \bar { b } = 0.5 , R _ { t } = \bar { r } = 5 \%;$ if $\bar { a } _ { i m }$
Rises 2 percent and the real interest rate falls 4 percent, short-run output:

A) rises 2 percent
B) rises 6 percent
C) falls 2 percent
D) rises 4 percent
E) does not change