If Aggregate Demand Shifts to the Left by $400 Billion

question 15

Multiple Choice

If aggregate demand shifts to the left by $400 billion and aggregate supply is upward-sloping,then real output will decrease by

• A)$400 billion,and the price level will not change.
• B)Less than $400 billion,and the price level will fall.
• C)$400 billion,and the price level will fall.
• D)More than $400 billion, and the price level will not change.

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Definitions:

Discounted

The process of determining the present value of a future amount by applying a discount rate.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specified rate of return.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return or discount rate.

Discounting

The process of determining the present value of future cash flows by applying a discount rate.