In the Long Run, a Decrease in Aggregate Demand, All

question 67

Multiple Choice

In the long run, a decrease in aggregate demand, all other things unchanged, will cause the price level to _______ and potential output to _______ .

• A)increase; increase
• B)decrease; decrease
• C)increase; remain stable
• D)decrease; remain stable

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Definitions:

Square Yards

A unit of area measurement equal to a square measuring one yard on each side, used in the United States for land and flooring measurements.

Including Tax

Means that the price mentioned for goods or services includes any taxes that are applicable.

Gallon

A unit of volume measurement in the US customary units and the British imperial system, usually used for liquids.

Gas

A state of matter consisting of particles that have neither a defined volume nor a defined shape, often used as a fuel for heating, cooking, and electricity generation, among other applications.