A negative shock in aggregate demand will likely result in no permanent change in ________
A) output
B) the equilibrium inflation rate if the central bank responds by lowering interest rates
C) aggregate demand, if the central bank responds by lowering interest rates
D) all of the above
E) none of the above
D
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Over the next few years more and more people prefer to ride on scooters. Which of the figures above best illustrates how this change affects the demand curve for scooters?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above answers is correct because the change in tastes will affect the supply curve not the demand curve.
We can represent the entry of new firms into a monopolistically competitive market by shifting the existing firms':
a. demand curves downward. b. demand curves upward. c. demand curves more inelastic. d. cost curves upward. e. cost curves downward.