Starting from a Situation of Full Employment, a Decrease in Aggregate

question 178

Multiple Choice

Starting from a situation of full employment, a decrease in aggregate demand ________ the price level, leading to ________.

• A) raises; an inflationary gap
• B) lowers; a recessionary gap
• C) raises; a recessionary gap
• D) lowers; an inflationary gap
• E) does not change; a decrease in potential GDP

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Definitions:

Fundamental Purpose

describes the core reason or main goal behind an entity's existence or an action being taken.

Promotion

A strategy used to raise awareness about a product, service, or entity, typically aiming to increase sales or public recognition.

B2B Products

B2B products are goods and services marketed and sold from one business to another, as opposed to consumer-facing transactions.

Sales Volume

The quantity of products or services sold within a particular period, indicating the level of business activity.