At the Current Level of Output, Suppose the Actual Price

question 48

Multiple Choice

At the current level of output, suppose the actual price level is greater than the price level that individuals expect. We know that:

• A) any subsequent decrease in the aggregate price level will cause an increase in the real money supply and a rightward shift in the aggregate demand curve.
• B) output is currently less than the natural level of output.
• C) the interest rate will tend to rise as the economy adjusts to this situation.
• D) the AS curve will tend to shift down over time.
• E) the nominal wage will tend to decrease as individuals revise their expectations of the price level.

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Definitions:

Decimal Notation

A way of expressing numbers that uses a decimal point to separate the whole part from the fractional part.

Expression

A combination of symbols and numbers that represent a mathematical operation or relation.

Difference

The result of subtracting one number from another, or the operation of subtraction itself.

Polynomials

Algebraic expressions that consist of variables and coefficients, combined using only addition, subtraction, multiplication, and non-negative integer exponents.