Suppose That, as Expected, Aggregate Demand in the Economy Sharply

question 160

Multiple Choice

Suppose that, as expected, aggregate demand in the economy sharply declines. New classical economists say that the price level will _____________ and real output will ____________.

• A) fall; remain constant
• B) fall; fall
• C) remain constant; fall
• D) remain constant; rise

---

Definitions:

Covalent Bond

A covalent bond is a chemical bond formed when two atoms share one or more pairs of electrons, strongly binding them together in a molecule.

Polysaccharides

Large molecules composed of long chains of monosaccharide units bonded together, serving various functions such as storage and structural roles in plants and animals.

Triacylglycerols

Lipids formed by three fatty acids linked to a glycerol molecule; a main form of energy storage in animals.

Phospholipids

Lipids in which two fatty acids and a phosphorus-containing group are attached to glycerol; major components of cell membranes.