Which of the Following Is False

question 35

Multiple Choice

Which of the following is false?

• A)Starting from full employment, an unexpected drop in aggregate demand causes a demand-induced recession.
• B)If policymakers do nothing in response to an unexpected drop in aggregate demand, the short-run aggregate supply curve eventually shifts to the right as firms and workers adjust their price expectations downward.
• C)If policymakers do nothing in response to an unexpected drop in aggregate demand, the economy eventually returns to full employment at a higher price level.
• D)In response to a drop in aggregate demand, if policymakers choose to boost demand through fiscal or monetary policy, then the economy returns to full employment at the original price level.