According to classical economists, when aggregate demand decreases
A) unemployment is reduced, the price level increases, and equilibrium real GDP is reached.
B) unemployment is reduced, the price level decreases, and equilibrium real GDP is reached.
C) unemployment temporarily increases, the price level increases, and equilibrium real GDP is reached.
D) unemployment temporarily increases, the price level decreases, and equilibrium real GDP is reached.
D
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A period of expansion in the business cycle ends when
A) the business cycle reaches its peak. B) the business cycle reaches its trough. C) real GDP is less than potential GDP. D) real GDP is equal to potential GDP.
If real disposable income increases, the average propensity to consume will
A) initially increase, and then decrease. B) remain constant. C) increase. D) decrease.
In oligopoly, minimum efficient scale is large relative to the market
a. True b. False
For a time, either R. J. Reynolds or Phillip Morris raised prices of cigarettes twice a year by about 50 cents per carton. The other firms in the industry raised their prices by the same amount. Economists call this: a price war. a. predatory pricing
b. a price war. c. price leadership. d. producer sovereignty.