A Decrease in Aggregate Demand Will

question 100

Multiple Choice

A decrease in aggregate demand will

• A)cause inflation.
• B)decrease unemployment.
• C)move the economy to a lower point on the short-run Phillips curve.
• D)cause the short-run Phillips curve to shift to the right.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to receive for a good or service and the amount they actually receive, due to higher market prices.

Equilibrium Price

The price at which the quantity of a good or service offered by sellers equals the quantity demanded by buyers, leading to a stable market condition.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.