If an Unanticipated Decrease in Aggregate Demand Results in an Output

question 7

Multiple Choice

If an unanticipated decrease in aggregate demand results in an output below the economy's long-run capacity, long-run equilibrium will eventually be restored by

• A) an increase in the rate of inflation.
• B) lower resource prices and lower real interest rates.
• C) higher resource prices and higher real interest rates.
• D) a decrease in the natural rate of unemployment.

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Definitions:

Property Tax Payable

A liability representing taxes due on the property owned by an individual or company, typically paid annually.

Non-current Liability

Long-term financial obligations listed on a company's balance sheet that are not due within the upcoming twelve months.

Non-current Asset

Assets not expected to be converted into cash, consumed, or utilized within one year of the balance sheet date, including property, plant, and equipment.

IFRS

International Financial Reporting Standards, a set of global accounting standards developed by the International Accounting Standards Board.