On Average, the Greater the Unexpected Decline in Aggregate Demand

question 295

Multiple Choice

On average, the greater the unexpected decline in aggregate demand

• A) the weaker is the resulting deflation.
• B) the greater is the resulting deflation.
• C) the greater is the resulting inflation.
• D) the greater is the rise in the price level.

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Definitions:

GDP Deflator

An economic metric that converts the output of an economy measured at current prices into constant-dollar terms to remove the effects of inflation.

Consumer Price Index

A methodology for assessing the weighted average pricing of consumer commodities and services, including healthcare, food, and transit.

Imported Oil

Oil brought into a country from another, affecting its balance of trade and energy policies.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of financial products.