If the Economy Experiences Simultaneous Negative Aggregate Demand and Aggregate

question 84

Multiple Choice

If the economy experiences simultaneous negative aggregate demand and aggregate supply shocks,and the Fed decides NOT to intervene with expansionary policy.Short-run aggregate supply will eventually shift back to the right,which will eventually bring the economy

• A) back to potential GDP at a lower price level.
• B) back to potential GDP at a higher price level.
• C) back to the original equilibrium price at a lower level of aggregate output.
• D) back to the original equilibrium price at a higher level of aggregate output.

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Definitions:

Nonprogrammed Decisions

Decisions made in response to situations that are unique, poorly defined, and largely unstructured, often requiring creative solutions.

Programmed Decisions

Decisions that are routine and repetitive, often made using established guidelines or procedures.

Routine Problem

A common or regularly occurring problem that typically has a known and straightforward solution.

Certain Environment

A scenario in decision-making where all necessary information and future outcomes are known and predictable.