A Decrease in Consumption Growth Will Cause Aggregate Demand To

question 252

Multiple Choice

A decrease in consumption growth will cause aggregate demand to:

• A) shift inward.
• B) shift outward.
• C) remain unchanged.
• D) first shift outward and then shift inward.

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Definitions:

Potential Output

The highest level of real GDP (gross domestic product) that can be sustained over the long term without increasing inflation.

Expected Price Level

The anticipated average level of prices for all goods and services in an economy for a future period, influenced by current and forecasted economic conditions.

Real Wage

The buying capacity of salaries once corrected for inflation, showing the amount of products and services that can be purchased.

Nominal Wage

The wage or salary paid to labor in current dollars, unadjusted for inflation, representing the face value of earned income.