Consider the IS curve a-bR-r) If there is no demand shock and ifb=2 and X 0.5, a 1 percent increase in the real interest 1-X rate will cause short-run output to OA. fall by 4 percent. OB. fall by 2 percent. OC. fall by 0.5 percent. OD.rise by 2 percent. O E. rise by 4 percent.

Real Interest Rate R It (a) B (b) G (c) F (d) C (e) D ******** F Figure 8.1 The IS curve ************* 0 A E 18₂ B D ISA 1So Short-Run output Ÿ 18. Consider the IS curve in Figure 8.1. If the interest rate increases and there is a positive aggregate demand shock, the economy will move from point A to point

Hi can you tell me if these are correct? they are true/false 20) In the classical view the money market has quickly adjustable interest rates which will equate aggregate savings and borrowing automatically. -true (the 'automatically' part is what is confusing me. I understand the market will adjust itself in the classical view, but I dont know if its AUTOMATIC or not...) 6) increases in AS reduce the rate of unemployment until you reach Qfe. -true  5) an increase in structural unemployment would be reflected as a shift of the vertical portion of the AS curve to the left- true these last two questions (#6 and #5) are both about the AS curve. Can you shift the AS curve? I thought that it symbolizes where Qfe was. can that shift too? and if it can, does that mean that the whole vertical portion of it moves?

1. Refer to the figure below. An increase in interest rate would cause: Price level, P AD₂ B AD ADO Aggregate output, Y A) the aggregate demand curve to shift from AD₁ to AD2 B) the economy to move from Point A to Point B C) the aggregate demand curve to shift from AD₁ to ADo D) neither a shift of the aggregate demand curve nor a change in real GD³

the real interest rate to If the output gap is positive, the Federal Reserve will raise; cool inflationary pressures lower; reduce unemployment O lower; cool inflationary pressures O raise; reduce unemployment