Answer: D. The price level will fall and rGDP will also fall if the demand falls.
Starting from long run equilibrium, in response to a decrease in aggregate demand:
A. The price level will increase more in the long run than in the short run.
B. The short run equilibrium level of real output will be greater in the long run than in the short run.
C. Neither the price level nor real output will change in the long run.
D. The price level will fall and rGDP will also fall if the demand falls.
Economics
You might also like to view...
Ad valorem tariffs on imports are based on a percentage of an import's value; specific tariffs are based on a lump sum per physical unit imported
a. True b. False
Economics
The lime drinks industry and the cola drinks industry are both operating as oligopolies. The two firms in the lime drinks industry agree to form a cartel, while the three firms in the cola drinks industry are unable to come to an agreement. In the given scenario, which of the following statements is true?
a. The producers of lime drinks will share monopoly profits, while the producers of cola drinks will have profit levels typical of competition. b. The producers of lime drinks will have the profit levels of monopolistic competitors, while the producers of cola drinks will eventually have zero profits. c. The producers of lime drinks will eventually have zero profits, while the producers of cola drinks have the profit levels of perfect competitors. d. The producers of lime drinks will have profit levels like perfect competitors, while the producers of cola drinks will share monopoly profits.
Economics