In the Long Run, a Decrease in Aggregate Demand, All

question 108

Multiple Choice

In the long run, a decrease in aggregate demand, all other things unchanged, will cause the price level to

• A) increase and potential output to increase.
• B) decrease and potential output to decrease.
• C) increase and potential output to remain stable.
• D) decrease and potential output to remain stable.

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Definitions:

Public Sector

The part of the economy that is controlled by the government, encompassing public services and enterprises.

Collective Bargaining Agreement

A written contract negotiated through collective bargaining by employees, through their representatives, and their employer, dictating the terms of employment.

Competitive Labor Market

A labor market characterized by numerous employers and job seekers, where wages are determined by supply and demand for labor.

Unionization

The process by which workers join together to form a union in order to collectively bargain with their employer regarding wages, benefits, and working conditions.