In Case of the Classical Model, Increase in Aggregate Expenditure

question 59

Multiple Choice

In case of the classical model, increase in aggregate expenditure would:

• A) shift the aggregate demand curve upward leading to an increase in real GDP and prices.
• B) shift the aggregate demand curve downward leading to an increase in real GDP and prices.
• C) shift the aggregate demand curve upward leading to a decrease in real GDP and prices.
• D) shift the aggregate demand curve downward leading to a decrease in real GDP and prices.
• E) shift the aggregate demand curve upward leading to an increase in prices and no change in real GDP.

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Definitions:

Overall System

refers to the entire set of components or elements that work together within a framework or environment.

Emotional Reaction

The immediate response of a person's feelings towards an event, situation, or experience.

Anger

An intense emotional response usually triggered by perceived wrongs or frustration, potentially influencing behavior and decision-making.

Anxiety

A mental health condition marked by feelings of worry, nervousness, or fear that are strong enough to interfere with one's daily activities.