If the Economy's AS Curve Is Upward Sloping,a Negative Shock

question 127

Multiple Choice

If the economy's AS curve is upward sloping,a negative shock to aggregate demand will result in

• A)an increase in prices and no change in real GDP.
• B)a decrease in prices but no change in real GDP.
• C)an increase in real GDP and no change in prices.
• D)an increase in both real GDP and prices.
• E)a decrease in both real GDP and prices.

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Definitions:

Simulate

To imitate the operation of a real-world process or system over time for purposes of experiment or training.

Absolute Advantage

Absolute advantage refers to the ability of a country, firm, or individual to produce a good or service more efficiently than its competitors using the same amount of resources.

Production Possibilities

The different combinations of goods and services that an economy can produce given its available resources and technology.

Fish

Aquatic animals that are typically covered with scales and have gills for breathing in water.