A decrease in the aggregate price level increases the purchasing power of many assets and therefore leads to a decrease in the quantity of aggregate output demanded.
Indicate whether the statement is true or false.
Ans: False.
It should be “Leads to an increase in the quantity of aggregate output demanded instead”.
You might also like to view...
Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: Name of CompanyRevenuesCost of Purchased inputsFulton Family Farm$0.500DeLux Popcorn Co.$2.50$.50Friendly Groceries$4.00$2.50What is the sum of the value added of all of the firms?
A. $3.00 B. $7.00 C. $6.50 D. $4.00
What is the term that explains why voters often lack knowledge of pending legislation, and lack knowledge of the views of candidates for office on a range of issues that affect their own (the voters') welfare?
A) rational ignorance B) regulatory capture C) the voting paradox D) logrolling
The World Trade Organization provides for all of the following EXCEPT
A) the usage of the most favored nation clause. B) assistance in the settlement of trade disagreements. C) bilateral tariff reductions. D) multilateral tariff reductions. E) the prevention of nontariff interventions in trade.
Suppose the economy is initially in long-run equilibrium. For each of the shocks listed below, explain the short-run effects on output and the price level
(a) A stock market crash reduces consumers' wealth. (b) Businesses decide to hold larger inventories. (c) The government cuts defense spending. (d) Foreign countries buy more U.S. goods.