An Economic Contraction Caused by a Shift in Aggregate Demand

question 184

Multiple Choice

An economic contraction caused by a shift in aggregate demand causes prices to

• A) rise in the short run, and rise even more in the long run.
• B) rise in the short run, and fall back to their original level in the long run.
• C) fall in the short run, and fall even more in the long run.
• D) fall in the short run, and rise back to their original level in the long run.

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Definitions:

Registered Retirement Income Fund

A retirement savings plan that holds investment products and pays out retirement income.

Equal withdrawals

Regularly scheduled payments of the same amount taken from an investment or savings account.

Compounded monthly

Interest calculation method where interest is added to the principal sum once a month, affecting the total interest accrued over time.

Compounded monthly

Interest calculation method where interest is added to the principal every month, increasing the amount of future interest accruals.