The degree to which _____ declines during a recession or increases during an expansion depends on the amount by which the ADand/or AS curves shift.
A)real GDP
B)nominal GDP
C)the money supply
D)real interest rate
E)the consumer price index

Question

Quizplus · Accepted Answer

Real GDP reflects the total value of goods and services produced within an economy, and it is directly impacted by both shifts in the aggregate demand (AD) and aggregate supply (AS) curves. During a recession, both AD and AS curves tend to shift to the left, which results in lower levels of real GDP due to decreased spending and production. Similarly, during an expansion, both curves tend to shift to the right, resulting in increased levels of real GDP due to increased spending and production. Therefore, the degree to which real GDP declines during a recession or increases during an expansion depends on the amount by which the AD and/or AS curves shift.

The Degree to Which _____ Declines During a Recession or Increases