If 1. an economy is operating close to its capacity, inflation is likely to follow excessive increases in: (a) real interest and unemployment rates. (b) Aggregate Demand. (c) the reserve requirements ratio. (d) income tax rates. (e) the FED's discount rate. 2. If an economy is operating at an output level equal to its potential GDP, then the economy is characterized by an absence of: (a) cyclical unemployment. (b) inflationary pressure. (c) structural unemployment. (d) wage price or stickiness. (e) money multiplier effects. 3. One condition necessary for an economy to produce output equal to potential GDP is that: (a) cyclical unemployment must be zero. (b) inflationary pressure in some sectors of the economy must be offset by deflationary pressure in o...