Suppose an economy originally in long-run equilibrium experiences a decrease in aggregate demand. According to the classical model
A) real Gross Domestic Product (GDP) will not change but the price level will fall.
B) real Gross Domestic Product (GDP) will fall, and then the price level will fall also.
C) the price level will not change but real Gross Domestic Product (GDP) will fall.
D) real Gross Domestic Product (GDP) will fall, wages will fall, but the prices of goods and services will stay the same.
A
You might also like to view...
The price of a good will fall if
A) there is a surplus at the current price. B) the current price is less than the equilibrium price. C) the quantity demanded exceeds the quantity supplied. D) the price of a complement in consumption falls.
The peak of the total revenue curve is achieved at the point where:
a. marginal revenue is the highest. b. price is the highest. c. marginal revenue is zero. d. marginal cost is zero.