A Negative Demand Shock

question 49

Multiple Choice

A negative demand shock

• A) shifts the AD curve to the right
• B) decreases real GDP and increases the price level in the short run
• C) is the result of an increase in money demand
• D) results in a movement down and to the right along the AD curve
• E) decreases both real GDP and the price level in the short run

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Definitions:

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible.

Net Efficiency

A measure of the effectiveness of an operation, typically calculated as the ratio of useful output to total input, factoring in losses and waste.

Remittances

Money sent by migrants to their home country, often to support family members.

Migration

The movement of people from one place to another with the intention of settling temporarily or permanently in the new location.