Which of the Following Is True About the Short Run

question 71

Multiple Choice

Which of the following is true about the short run effects of a contractionary monetary policy in Keynesian model?

• A)Output declines,price level declines,real interest rate rises.
• B)Output increases,price level increases,real interest rate declines.
• C)Output increases,price level increases,real interest rate increases.
• D)Output declines,price level declines,real interest rate declines.

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Definitions:

Shortage

A situation where the demand for a product or service exceeds the supply available.

Surplus

A situation where the quantity of a good or service supplied exceeds the quantity demanded at a given price.

Equilibrium Quantity

The amount of products or services available and sought after at the equilibrium price, where the supply meets the demand.

Price Floor

A government or regulatory-imposed minimum price for goods or services, intended to prevent prices from dropping too low.