If There Is an Unanticipated Increase in Aggregate Demand, Then

question 100

Multiple Choice

If there is an unanticipated increase in aggregate demand, then according to new classical economics, the economy will self-correct with a(n)

• A) decrease in short-run aggregate supply, so output returns to its initial level but the price level rises.
• B) decrease in short-run aggregate supply, so output increases and the price level rises.
• C) decrease in short-run aggregate supply, so output returns to its initial level and the price level falls.
• D) increase in short-run aggregate supply, so output increases and the price level rises.

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Definitions:

Hassles Scale

A tool used to measure the frequency and intensity of minor irritations and annoyances in everyday life.

Physiological Instruments

Tools and devices used to measure and monitor bodily functions in the study or treatment of physiological processes.

Objective Environmental Stimulus

A physical event or change in the environment that can be measured and observed independently of individual subjective experiences.

Fight or Flight

A physiological response to perceived harmful events, attacks, or threats to survival, activating the sympathetic nervous system to prepare the body for fleeing or fighting.