If the Aggregate Demand Curve Shifts Rightward Following a Decrease

question 132

Multiple Choice

If the aggregate demand curve shifts rightward following a decrease in the federal funds rate, what can be concluded if the short-run aggregate supply curve is rather steep?

• A) There will be a significant increase in real GDP with little impact on the price level.
• B) There will be a significant increase in both real GDP and the price level.
• C) There will be little increase in real GDP but a significant increase in the price level.
• D) There is significant unemployment and slack in the economy.

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Definitions:

General Motors

An American multinational corporation headquartered in Detroit, Michigan, that designs, manufactures, markets, and distributes vehicles and vehicle parts.

Sunbelt

A region in the United States defined by its warm climate, extending across the Southeast and Southwest, notable for its significant economic growth and population increase in the late 20th century.

Right-to-Work Laws

Legislation that prohibits union security agreements, allowing employees in unionized workplaces to opt out of joining the union and paying union dues.

Closed Shops

Workplaces where all employees must be members of a specific labor union as a condition of employment, effectively limiting hiring to union members only.