Use the Following Graph to Answer the Following Questions

question 119

Multiple Choice

Use the following graph to answer the following questions.The graph depicts an economy where aggregate demand and long-run aggregate supply (LRAS) have decreased,with no change in short-run aggregate supply (SRAS) .

-During the Great Recession,real gross domestic product (GDP) fell,yet the price level was largely unchanged,as depicted in the graph.Because of this,we know that ________ during the recession.

• A) both aggregate demand and long-run aggregate supply increased
• B) aggregate demand and long-run aggregate supply both decreased
• C) aggregate demand decreased and long-run aggregate supply increased
• D) aggregate demand decreased and short-run aggregate supply increased
• E) long-run aggregate supply increased and short-run aggregate supply decreased

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Definitions:

Marginal Utility

The additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.

Income Distribution

The way in which total income is shared among individuals or groups within an economy.

Utilitarians

A group of philosophers who believe that the best action is the one that maximizes utility, often defined as the well-being of the greatest number of people.

Liberals

A political ideology emphasizing the importance of individual liberties, democracy, and supporting social and economic interventions to promote social justice.