Let Aggregate Demand Rise in a World Characterized by a Lucas

question 59

Multiple Choice

Let aggregate demand rise in a world characterized by a Lucas aggregate supply curve where price level changes are accurately perceived. In that case, you expect to see

• A) a large change in GDP coupled with a small increase in prices.
• B) a large change in GDP coupled with a small reduction in prices.
• C) a small change in GDP coupled with a large increase in prices.
• D) a small change in GDP coupled with a small reduction in prices.
• E) a small change in GDP coupled with a large reduction in prices.

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Definitions:

Dural Venous Sinus

Channels found between the layers of the dura mater in the brain, which collect and drain venous blood from the brain back to the heart.

Cerebral Aqueduct

A canal within the brain through which cerebrospinal fluid flows, connecting the third and fourth ventricles.

Lateral Ventricle

One of the two ventricles located in the cerebral hemispheres, part of the brain's ventricular system where cerebrospinal fluid is produced and circulates.

Fourth Ventricle

A chamber of the brain located within the brainstem, responsible for circulating cerebrospinal fluid between the brain's interior and spinal canal.