A Decrease in the Price Level in an Economy Will

question 41

Multiple Choice

A decrease in the price level in an economy will _____.

• A)shift the aggregate expenditure line upward
• B)shift the aggregate expenditure line downward
• C)cause an upward movement along the aggregate expenditure line
• D)cause a downward movement along the aggregate expenditure line
• E)shift the aggregate demand curve leftward

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Definitions:

Hyperinflation

An extremely high and typically accelerating rate of inflation, often exceeding 50% per month.

Long-run Equilibrium

A state in an economy or market where all factors of production are fully utilized, and all prices and quantities have adjusted so that aggregate supply equals aggregate demand.

Inflation Expectations

Consumers' and investors' predictions about future inflation rates, which can influence economic decisions and actual inflation through their impact on wages, prices, and interest rates.

Short-run Phillips Curve

A graphical representation showing an inverse relationship between the rate of inflation and the rate of unemployment in an economy over the short-term.