New Classical Economists Say That an Unanticipated Decrease in Aggregate

question 242

Multiple Choice

New classical economists say that an unanticipated decrease in aggregate demand first

• A) decreases the price level and real output, and then decreases long-run aggregate supply.
• B) decreases long-run aggregate supply, and then decreases the price level and real output.
• C) reduces short-run aggregate supply, and then reduces long-run aggregate supply.
• D) decreases the price level and real output, and then increases short-run aggregate supply such that the economy returns to the full-employment level of output.

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Definitions:

Chief Joseph

A leader of the Nez Perce tribe who conducted a remarkable retreat in an attempt to lead his people to Canada in 1877 to escape conflicts with the U.S. government.

Wounded Knee Massacre

Last incident of the Indian Wars; it took place in 1890 in the Dakota Territory, where the U.S. Cavalry killed over 200 Sioux men, women, and children.

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The importance attributed to an event, object, or figure in history based on its impact or consequences.

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