In the Classical Model, an Increase in Aggregate Demand Will

question 319

Multiple Choice

In the classical model, an increase in aggregate demand will cause

• A) an increase in actual output, or Gross Domestic Product (GDP).
• B) a decrease in actual output, or Gross Domestic Product (GDP).
• C) an increase in price level.
• D) a decrease in price level.

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Definitions:

Capital And Financial Account Deficits

A situation where a country's capital outflows exceed its capital inflows, resulting in a net outflow of domestic currency to foreign markets.

Balance Of Payments Surpluses

A situation where the total of a country's international transactions results in net earnings, with more credits from exports and capital income than debits for imports and overseas investments.

Recession

A significant decline in economic activity across the economy, lasting longer than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Trade Surplus

The amount by which a nation’s exports of goods (or goods and services) exceed its imports of goods (or goods and services).