MACROECONOMICS

QUESTION 1 Suppose a central bank engages in a policy to reduce the inflation rate for any given level of real GDP. This would be depicted by a(n} O downward movement along the MP line. 0 leftward shift of the MP line. 0 upward movement along the MP line. 0 rightward shift of the MP line. QUESTION 2 Suppose that the economy is initially at potential GDP. If the central bank is worried about inflation and raises interest rates, then in the short run 0 the AD curve will shift to the left. 0 the AD curve will shift to the right. 0 the AD curve will shift to the left, and the IA line will shift down because the target inflation rate has decreased. 0 the IA line will shift down because the target inflation rate has decreased. 0 the IA line will shift up because the target inflation rate has increased