11) In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If there is no policy intervention, we should expect ________. A) rightward shifts of IS & AD, so that both output and inflation rise B) a decrease in inflation to shift the MP curve, raising the real interest rate C) declines in both the inflation rate and the real interest rate as output rises D) a decrease in inflation to shift the AD curve, causing output to rise E) none of the above 12) In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If a fiscal stimulus package is implemented quickly, raising output to $12 trillion, while inflation remains constant at one percent, then the figure implies that the real interest rate will be ________ percent. A) 1.5 B) zero C) one D) 0.5 E) 2.5 13) In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If autonomous monetary policy (alone) is used to bring output to $12 trillion, then the figure implies that the real interest rate will be ________ percent, and the inflation rate will be one percent. A) 1.5 B) zero C) one D) 0.5 E) 2.5 14) In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If there is no policy intervention, then the figure implies that when output has reached $12 trillion, the real interest rate will be ________ percent, and the inflation rate will be ________ percent. A) 1.5; one B) one; zero C) zero; minus 2 D) 0.5; minus one E) 2.5; three 15) In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. Suppose that a combination of fiscal stimulus and recovery of consumer and business confidence shifts the IS and AD curves, as shown in the figure, while monetary policy sets the real interest rate at one percent. If the short-run aggregate supply curve is Ï€ = Y – 13, then the resulting values of output and inflation are ________. A) $12 trillion & 3 percent B) $13.5 trillion & 5 percent C) $9.75 trillion & 0 percent D) $13.5 trillion & 0 percent E) $12.5 trillion & 2 percent 16) In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. Suppose that a combination of fiscal stimulus and recovery of consumer and business confidence shifts the IS and AD curves, as shown in the figure. The equilibrium real interest rate is ________ percent. A) 3 B) one C) 2.5 D) 2 E) zero 17) How might openness to the global economy influence the debate between policy activists and nonactivists? 18) How might long policy lags impact the divine coincidence?