A Decrease in the Aggregate Demand Curve Along the LRAS

question 81

Multiple Choice

A decrease in the aggregate demand curve along the LRAS curve, all other things unchanged, will generate ____ in potential real GDP and ____ in the price level.

• A) an increase; no change
• B) a decrease; no change
• C) no change; an increase
• D) no change; a decrease

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds.

Direct Method

In cash flow statement preparation, the Direct Method lists all major operating cash receipts and payments, showing the net cash provided by or used in operating activities.

Financial Flexibility

The ability of a company or individual to adjust its spending and capital allocation in response to changing circumstances and opportunities, ensuring financial stability and the potential for growth.

Liquidity

The capacity of an asset to be rapidly transformed into cash without notably influencing its market value.