Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:
A. both the price level and real GDP.
B. real GDP without raising the price level.
C. the price level without affecting real GDP.
D. the price level but increase real GDP.
Answer: A
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Which of the following is NOT true of institutions?
A) Institutions affect incentives. B) Institutions are determined by individuals as members of society. C) Institutions are permanent and cannot be changed over time. D) Institutions act as constraints on the behavior of economic agents.
In the most basic model presented in the text, when aggregate expenditures cross the 45-degree line,
a. saving equals intended investment b. saving is greater than intended investment c. saving is less than intended investment d. saving equals consumption e. saving equals inventories