In the long run, aggregate demand is _ for determining real GDP, and the paradox of thrift .
A)stable and important; applies
B)not important; applies
C)not important; does not apply
D)the most important influence; does not apply
E)the only influence; applies

Question

Quizplus · Accepted Answer

In the long run, real GDP is determined by aggregate supply, not aggregate demand, as the economy is at full employment. The paradox of thrift, which suggests that increased saving can lead to a decrease in aggregate demand and thus lower total savings, does not apply in the long run because the economy adjusts to changes in savings.

In the Long Run, Aggregate Demand Is _ for Determining