Which of the following is a true statement?
A. Firms and resource suppliers generally find it easier to reduce prices than to raise them.
B. As the price level increases, interest rates will rise and therefore consumption and
investment spending will also rise.
C. An initial increase in aggregate demand may cause a further increase in aggregate
demand because higher prices mean higher incomes.
D. A decline in aggregate demand will primarily affect real output and employment if prices
are inflexible downward.
D. A decline in aggregate demand will primarily affect real output and employment if prices
are inflexible downward.
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Which country has the largest real GDP?
a. china b. japan c. US d. Qatar e. liechtenstein
Which of the following explains why the government should not increase spending by the entire amount of the AD shortfall to move the economy to full employment?
A. The multiplier process will contribute to an additional increase in aggregate demand that will cause an inflationary gap. B. The price level is constant. C. The government can increase taxes to create an additional increase in aggregate demand. D. Price level changes will make up for the difference between the fiscal stimulus and the AD shortfall.