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Multiple Choice Quiz
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1
Potential output tends to rise over time.
A)True
B)False
2
Economic decisions of households to save and firms to invest depend on the nominal interest rate.
A)True
B)False
3
The long-run real interest rate and the inflation target determine the location of the monetary policy reaction curve; the aggressiveness of monetary policymakers in pursuing the inflation target determines its slope.
A)True
B)False
4
Increases in inflation result in a rightward shift of the dynamic aggregate demand curve.
A)True
B)False
5
Output gaps result in changes in production costs and shifts in the short-run aggregate supply curve.
A)True
B)False





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