If Aggregate Demand Decreases, the

question 43

Multiple Choice

If aggregate demand decreases, the

• A) short-run Phillips curve shifts rightward.
• B) short-run Phillips curve does not shift nor is there a movement along it.
• C) economy moves to a lower inflation rate along its short-run Phillips curve.
• D) economy moves to a higher inflation rate along its short-run Phillips curve.
• E) short-run Phillips curve shifts leftward.

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Definitions:

Demand Decrease

Demand decrease refers to a downward shift in the demand curve, indicating that consumers are willing to purchase less of a good at any given price.

General Equilibrium Analysis

An economic framework for understanding how supply and demand interact across multiple markets to determine prices in an entire economy.

Feedback Effects

The process where outcomes or outputs of a system loop back to influence the inputs or initial conditions, often amplifying or dampening effects in the system.

Partial Equilibrium

An analysis of equilibrium within a specific market or sector, ignoring interactions with other markets or the effects of changes in them.