Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Output will increase.
B) Prices will decline.
C) Unemployment will decline.
D) Short-run aggregate supply will shift to the left.
Answer: D
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What is TRUE about government budget deficits and surpluses since 1940?
A) There have been more government budget surpluses than government budget deficits. B) The number of government budget deficits is about the same as the number of government budget surpluses. C) Balanced budgets have been more common than government budget deficits or government budget surpluses. D) There have been more government budget deficits than government budget surpluses.
Which of the following would not shift the aggregate expenditures curve?
A. Changes in consumer or business confidence B. A change in the real interest rate C. Changes in net exports that result from exchange rate changes D. Fiscal policy changes