Suppose a negative aggregate demand shock causes short-run output to drop to -1%. To stimulate investment and bring the economy back to potential output the interest rate decreases by 1 percentage point. However, as a result investment increases more than expected and short-run output reaches 1%. This result could be caused by:
- An increase in the consumption share of potential output
- An increase in the government purchases share of potential output
- A decrease in the import share of potential output
- The presence of a consumption multiplier
- All of these are correct