Consider the AD/AS Model After Factor Prices Have Fully Adjusted

question 83

Multiple Choice

Consider the AD/AS model after factor prices have fully adjusted to output gaps.An increase in the level of potential output,with aggregate demand constant,will

• A)affect only the price level.
• B)decrease real GDP and the price level.
• C)affect only the level of real GDP.
• D)increase real GDP and lower the price level.
• E)decrease real GDP and raise the price level.

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Definitions:

Causes

The reasons or factors that bring about an outcome or influence an event to happen.

Functional Disorders

Medical conditions with symptoms not attributable to any structural or organ specific pathology, often related to the body's functional systems.

Psychosis

A mental disorder characterized by a disconnection from reality, manifesting in symptoms like hallucinations, delusions, and incoherent speech or behavior.

Neurosis

A class of functional mental disorders involving distress but neither delusions nor hallucinations, causing significant emotional upset.