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.

---

Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can be applied to income, property, sales, and other taxes.

Cash Expenses

Outflows of cash during a particular period for operational activities, excluding non-cash expenses like depreciation.

CCA Class

CCA Class, or Capital Cost Allowance Class, involves categorizing depreciable assets into classes for tax purposes in Canada, affecting the rate at which assets can be depreciated.