Any factor that shifts the$\_\_\_\_\_\_\_\_\_\_$ curve shifts the$\_\_\_\_\_\_\_\_\_\_$ curve in the$\_\_\_\_\_\_\_\_\_\_$ direction.

A$.$

$$MP; IS; opposite

B$.$

$$IS; AD; same

C$.$

$$MP; IS; same

D$.$

$$IS; AD; opposite

Part $2$

Suppose that taxes are decreased and the central bank conducts an autonomous easing of monetary policy. What will be the$$ result?

A$.$

The IS curve shifts$$ left, the MP curve shifts$$ down, and the AD curve shifts right.

B$.$

The IS curve shifts$$ left, the MP curve shifts$$ up$,$ and the AD curve shifts left $.$

C$.$

The IS curve shifts$$ right, the MP curve shifts$$ down, and the AD curve shifts right.

D$.$

The IS curve shifts$$ right, the MP curve shifts$$ up$,$ and there is an ambiguous effect on the AD curve.

Part $3$

Which of the following represents a movement along a given AD$$ curve?

A$.$

Inflation$$ decreases, the real interest rate$$ decreases, and aggregate output decreases.

B$.$

Inflation$$ decreases, the real interest rate$$ decreases, and aggregate output increases.

C$.$

Inflation$$ increases, the real interest rate$$ increases, and aggregate output increases.

D$.$

Inflation$$ increases, the real interest rate$$ decreases, and aggregate output increases.