Solved

-In the Above Figure, Start with the Economy in Equilibrium

Question 60

Multiple Choice

  -In the above figure, start with the economy in equilibrium at point A. Then an unanticipated reduction in aggregate demand triggers a shift from AD1 to AD2. In the short run, this would cause A)  the price level to fall from P1 to P2, real Gross Domestic Product (GDP)  to fall from Y1 to Y2, and the rate of unemployment to increase. B)  the price level to move from P1 to P2, but real Gross Domestic Product (GDP)  would stay at Y1. C)  the price level to fall by some amount less than P1 but greater than P2, and the rate of unemployment would decrease. D)  no change in either the price level or real Gross Domestic Product (GDP) , but a decrease in unemployment.
-In the above figure, start with the economy in equilibrium at point A. Then an unanticipated reduction in aggregate demand triggers a shift from AD1 to AD2. In the short run, this would cause


A) the price level to fall from P1 to P2, real Gross Domestic Product (GDP) to fall from Y1 to Y2, and the rate of unemployment to increase.
B) the price level to move from P1 to P2, but real Gross Domestic Product (GDP) would stay at Y1.
C) the price level to fall by some amount less than P1 but greater than P2, and the rate of unemployment would decrease.
D) no change in either the price level or real Gross Domestic Product (GDP) , but a decrease in unemployment.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents