Given a downward-sloping aggregate demand curve, if short-run aggregate supply increases, real GDP must increase and nominal GDP must fall
a. True
b. False
Indicate whether the statement is true or false
False
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Trade-offs are involved in most policy decisions
a. True b. False Indicate whether the statement is true or false
When disposable income is 2,000.
A. savings is zero.
B. consumption is 2,000.
C. consumption equals disposable income.
D. All the choices are true.
In the quantity theory of money:
A. the price level is a function of the supply of money. B. the supply of money is a function of the price level. C. the money supply and the price level are inversely related. D. the money supply is controlled by the government.