Can a change in the price level change aggregate demand?
A) Yes, as the price level rises, aggregate demand falls.
B) Yes, but only under the condition that the real balance effect is operational.
C) No, only a change in a factor other than the price level can change aggregate demand.
D) No, a change in the price level can only change aggregate supply.
E) none of the above
C
You might also like to view...
If the unemployment rate is less than the natural unemployment rate, then
A) there is no frictional unemployment. B) cyclical unemployment is greater than zero. C) real GDP is less than potential GDP. D) real GDP is greater than potential GDP. E) frictional unemployment is negative.
It is possible for a market for a good to experience a surplus and a shortage at the same time
Indicate whether the statement is true or false
Where it can function, a market for pollution rights can serve to internalize the air-pollution externality
Indicate whether the statement is true or false
If the bonds of two different countries are identical, their expected returns will:
A. always be equal. B. be equal only if the inflation rate is the same in each country. C. be equal only if the exchange rate between the two countries is fixed. D. be equal if capital flows freely internationally.