If the economy is in a deep recession, a modest increase in aggregate demand is likely to cause _____ in prices and _______ in output level.
a) an increase; an increase
b) an increase; little or no change
c) a decrease; an increase
d) little or no change; an increase
e) little or no change; little or no increase
Answer: d) little or no change; an increase
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A demand curve shows the relationship between
A) the price of a produce and the demand for the product. B) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. C) the price of a product and the quantity of the product demanded. D) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price.
Ceteris paribus, in the long run, a negative supply shock causes
A) the long-run aggregate supply curve to shift to the left. B) unemployment to fall below its short-run level. C) equilibrium real GDP to fall. D) the price level to rise initially, and then return to its lower level.