What Would Be the Effect of a Decrease in the Real

question 18

Multiple Choice

What would be the effect of a decrease in the real interest rate and an increase in the expected inflation rate?

• A) Both changes would decrease aggregate demand.
• B) Both changes would increase aggregate demand.
• C) Both changes would increase short-run aggregate supply.
• D) Both changes would increase long-run aggregate supply.

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Definitions:

Age Grades

Social categorizations based on age, often used in various cultures to organize community roles and responsibilities according to life stages.

Open-class Societies

Societies characterized by fluidity in social mobility and the absence of rigid caste systems, allowing individuals to change their social status.

Closed-class Societies

Societies characterized by strict social stratification and limited mobility, where individuals' roles and statuses are often predefined.