The reduction in aggregate demand caused by deflation:
A. further reduces prices, causing a deflationary spiral.
B. further reduces prices, causing aggregate supply to shift left back to long-run equilibrium.
C. will decrease production and increase prices, causing inflation to adjust the price level.
D. will decrease production and increase prices, causing a deflationary trap.
Answer: A
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The table below shows how the payoffs to two political candidates depend on whether the candidates run a positive or negative campaign. The payoffs are given in terms of the percentage change in the number of votes received. Running a negative campaign is ________ for the ________ candidate.
A. a dominant strategy; Democratic B. neither a dominant nor dominated strategy; Republican C. a dominated strategy; Democratic D. a dominated strategy; Republican
In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500rI = 150 - 1,000rG = 200NX = 50T = 100Given the information about the economy above, the immediate impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) from 5 percent to 4 percent is ________, and the eventual impact on short-run equilibrium output is ________.
A. an increase by 15 units; a increase by 150 units. B. an increase by 150 units; a decrease by 1,500 units. C. an increase by 150 units, an increase by 150 units. D. a decrease by 15 units, a decrease by 150 units.
The figure above shows Sally's budget line and one of her indifference curves. At point a, Sally's marginal rate of substitution is ________
A) 1/4 B) 4 C) 10 D) 40
If the federal government brings in $3 trillion in tax revenues and spends $4 trillion, the government has a budget:
A. surplus of $1 trillion. B. deficit of $1 trillion. C. surplus of $7 trillion. D. deficit of $0.75 trillion.