Suppose the Economy Is on the Intermediate Range of the Aggregate

question 78

Multiple Choice

Suppose the economy is on the intermediate range of the aggregate supply curve. Which of the following would reduce both real GDP and the price level?

• A) a decrease in aggregate supply
• B) an increase in aggregate supply
• C) a decrease in aggregate demand
• D) an increase in aggregate demand

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Definitions:

Debt Securities

Financial instruments representing money borrowed by the issuer that must be repaid, such as bonds, notes, and bills.

Interest Rates

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.

Capital

Financial assets or resources that individuals or companies use to fund their business operations and investments.

Bond Prices

The trading price of bonds in the market, which can vary based on interest rates, the bond's credit quality, and other factors, inversely related to changes in interest rates.