Suppose That You Were to Observe GDP Climbing Even While

question 14

Multiple Choice

Suppose that you were to observe GDP climbing even while prices were falling. If you were to take a long-term perspective, you could explain your observation in terms of

• A) an increase in aggregate demand accompanied by a reduction in potential GDP.
• B) a reduction in aggregate demand accompanied by a reduction in potential GDP.
• C) an increase in aggregate demand alone.
• D) an increase in potential GDP alone.
• E) any of these depending on economic circumstance.