Suppose an Economic Contraction Occurs, Due to a Shift in Aggregate

question 50

Multiple Choice

Suppose an economic contraction occurs, due to a shift in aggregate demand.How will prices change, assuming no government intervention?  

• A) Prices will rise in the short run, and rise even more in the long run. 
• B) Prices will rise in the short run, and fall back to their original level in the long run. 
• C) Prices will fall in the short run, and fall even more in the long run. 
• D) Prices will fall in the short run, and rise back to their original level in the long run.

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Definitions:

Leafy Vegetables

Vegetables that consist mostly of leaves, such as spinach, kale, and lettuce, known for their nutritional value, including vitamins, minerals, and fiber.

Scurvy

A disease caused by lack of fresh fruits, vegetables, and vitamin C in the diet.

Vitamin C

Vitamin C is an essential nutrient and antioxidant found in fruits and vegetables, crucial for the repair of tissue and the enzymatic production of certain neurotransmitters.

Phosphorus

A chemical element with symbol P, essential for living organisms, contributing to the formation of DNA, RNA, and ATP.