Using the Aggregate Demand-Aggregate Supply Model, Predict What Happens in the Short

question 49

Multiple Choice

Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost.

• A) The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.
• B) The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases.
• C) The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase.
• D) The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.

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Definitions:

Psychology

The scientific study of behavior and mental processes.

Objectivity

The practice of maintaining impartiality and neutrality, avoiding bias or subjective influence in judgments or actions.

Empirical Method

Gaining knowledge through the observation of events, the collection of data, and logical reasoning.

Objectivity

The quality of being impartial or neutral, free from personal bias or emotions, particularly in the analysis or presentation of data.