If the price of inputs falls and the level of consumer indebtedness rises:
a. Price index rises, and real GDP rises.
b. Price index rises, and real GDP falls.
c. Price index rises, and the change in real GDP is uncertain

Is the federal government budget today in surplus or deficit?

What will be an ideal response?

Refer to the diagram and assume the economy initially is in equilibrium at point a. In the mainstream view, a decline in aggregate demand from AD 1 to AD 2 would likely move the economy:

A.  directly from a to d.
B.  directly from a to b.
C.  from a to c, then quickly from c to d.
D.  from a to c, then eventually from c to b.