Consider an Economy with a Relatively Steep AS Curve

question 79

Multiple Choice

Consider an economy with a relatively steep AS curve.If the AD curve shifts to the left,then the price level will ________ and national output will ________.

• A)increase slightly; significantly increase
• B)increase slightly; significantly decrease
• C)increase sharply; increase slightly
• D)fall sharply; will not change.
• E)fall sharply; decrease slightly.

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Definitions:

Expected Income

The amount of money an individual or entity anticipates earning over a certain period.

Probability

The measure of the likelihood that a particular event will occur, often expressed as a number between 0 and 1.

Insurance Market

A marketplace where individuals and entities can purchase insurance products to transfer risk and receive financial protection against loss.

Asymmetric Information

A situation in which one party in a transaction has more or better information than the other party, often leading to an imbalance in a transaction.