If the Aggregate Demand Curve Shifts Rightward Following a Decrease

question 132

Multiple Choice

If the aggregate demand curve shifts rightward following a decrease in the federal funds rate, what can be concluded if the short-run aggregate supply curve is rather steep?

• A) There will be a significant increase in real GDP with little impact on the price level.
• B) There will be a significant increase in both real GDP and the price level.
• C) There will be little increase in real GDP but a significant increase in the price level.
• D) There is significant unemployment and slack in the economy.

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Definitions:

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A learning process by which an association is formed between two stimuli or a behavior and a stimulus.

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A teaching mechanism where a response initially caused by a secondary stimulus becomes triggered by the primary stimulus after repeated pairings of the two stimuli.

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