If the Aggregate Demand Curve Shifts Rightward Following a Decrease

question 71

Multiple Choice

If the aggregate demand curve shifts rightward following a decrease in the cash rate, what can be concluded if the short- run aggregate supply curve is rather steep?

• A)There is significant unemployment and slack in the economy.
• B)There will be a significant increase in real GDP with little impact on the price level.
• C)There will be a significant increase in both real GDP and the price level.
• D)There will be little increase in real GDP but a significant increase in the price level.

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Definitions:

Circularity

In finance, refers to the use of initial output values of a model to calculate new inputs, leading to dependency within the calculations.

Iterative Technique

An iterative technique refers to a process or method where a sequence of operations is repeated in order to approach closer to a desired result.

Planning Assumptions

Assumptions made regarding future events, conditions, and decisions that affect an organization's strategic planning and operations.

Dividend Payout Ratio

Dividend Payout Ratio is a financial metric that measures the proportion of a company's earnings paid out to shareholders in the form of dividends.