Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?
(A) Both aggregate demand and aggregate supply will decrease, leading to lower real GDP.
(B) Aggregate demand will decrease, lowering both real GDP and the price level.
(C) Aggregate supply will decrease, raising the price level and lowering real GDP.
(D) No change on aggregate demand and aggregate supply.
Ans: (B) Aggregate demand will decrease, lowering both real GDP and the price level.
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Because air cargo as an industry involves the generation of pollutants in engine exhaust, the equilibrium price of air cargo services
A) is above the optimal level, and quantity is below the optimal level. B) is below the optimal level, and quantity is above the optimal level. C) and quantity of trucking services are both above the optimal level. D) and quantity of trucking services are both below the optimal level. E) must fall in order for the market to reach equilibrium.
Which of the following statements is correct?
A. The actual reserves of a commercial bank equal its excess reserves minus its required reserves. B. A bank's liabilities plus its net worth equal its assets. C. When borrowers repay bank loans, the supply of money increases. D. A single commercial bank can safely lend a multiple amount of its excess reserves.
You lend a friend $10,000 for a year. At the end of the year your friend agrees to pay you $10,700. The interest rate on this loan is
A. 0.07%. B. 7.00% C. 107%. D. indeterminate from this information.
For a firm, a decrease in the interest rate resulting from monetary policy can:
A. decrease its net worth. B. decrease the cost of its liabilities. C. decrease the value of its assets. D. all of the answers given are correct.