If the Economy Is in Macroeconomic Equilibrium with a Vertical

question 4

Multiple Choice

If the economy is in macroeconomic equilibrium with a vertical AS curve, and then aggregate demand decreases, we expect the AE function to shift to a

• A)lower level and stay there.
• B)higher level and stay there.
• C)higher level but then return to its original position as the price level falls.
• D)higher level, but then shift part of the way down to its original position as the price level falls.
• E)lower level, but then return to its original position as the price level falls.

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Definitions:

Monthly Payments

Regular payments made each month, often in the context of repaying a loan or lease.

Lump Sum

A one-time payment made at a specific moment, rather than multiple smaller payments spread over time.

Savings Options

Various financial vehicles available for setting aside money, such as savings accounts, certificates of deposit, and money market funds, with the aim of earning a return.