A simultaneous rise in aggregate demand and fall in short-run aggregate supply will definitely
A) raise the price level, but there is not enough information to know how Real GDP will change.
B) lower Real GDP, but there is not enough information to know how the price level will change.
C) raise the price level and Real GDP.
D) raise Real GDP, but there is not enough information to know how the price level will change.
E) raise the price level and lower Real GDP.
A
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The aggregate supply curve normally
a. slopes downward and to the right due to higher resource prices. b. has a horizontal slope equal to zero. c. is very steep in the lower portion and flatter in the upper portion. d. slopes upward to the right due to short-run fixed costs of production.
Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short run?
A) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. B) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. C) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. D) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall.