Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?
A) Potential real GDP increases continuously.
B) The aggregate demand curve shifts to the right during most periods.
C) The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.
D) Aggregate demand and potential real GDP decrease continuously.
Answer: D
You might also like to view...
When the price of a bond rises, the interest rate paid on the bond also rises.
a. true b. false
Which of the following best illustrates the fallacy of composition? a. If I have more money, I will be better off; therefore if we all had more money, we all would be better off
b. If I buy more gas each week, my gas consumption increases; therefore, if all gas consumers buy more gas each week, total gas consumption will increase. c. If I spend more time studying, I will learn more; therefore, if all students spend more time studying, they will learn more. d. If women's hemlines are higher this year, the Dow Jones Industrials average will fall.