During the Obama administration, the development of low-cost batteries for electric cars received large amounts of federal funding in terms of subsidies. Meanwhile, American households gave a higher priority towards minimizing their environmental impact. Consider the market for zero-emissions electric vehicles where there is an upward-sloping supply curve and a downward-sloping demand curve. What will happen to the equilibrium price?

Suppose aggregate demand in the economy sharply declines. Mainstream economists say that the price level (at least for a time) will _______ and real output will _________

A. decrease; remain constant B. increase; remain constant C. remain constant; decrease D. remain constant; increase

If persistent inflation was due to declines in long-run aggregate supply, what pattern would be observed?

A. Only prices of services would increase; prices of goods would remain constant. B. Increases in the price level would occur simultaneously with increases in real GDP. C. Only prices of goods would increase; prices of services would remain constant. D. Increases in the price level would occur simultaneously with decreases in real GDP.