Suppose the Price Level Falls

question 46

Multiple Choice

Suppose the price level falls. The result is that the:

• A) aggregate supply curve would shift to the right.
• B) aggregate supply curve would shift to the left.
• C) general price level would rise causing a movement up the aggregate demand curve.
• D) aggregate demand curve would slope downward because of the real balances effect.

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Definitions:

Taft-Hartley Act

A 1947 US federal law that restricts the activities and power of labor unions, formally known as the Labor Management Relations Act.

Government Regulation

The imposition of rules by government, backed by the use of penalties that are intended to modify the economic behavior of individuals and firms in the private sector.

Union Shop Agreements

Agreements requiring all employees in a particular company or industry to become union members as a condition of their employment.

Agency Shop Agreements

A form of union security agreement where employees are not required to join the union, but must pay union fees as if they were members.