If Aggregate Demand Decreases and Neither Short-Run nor Long-Run Aggregate

question 169

Multiple Choice

If aggregate demand decreases and neither short-run nor long-run aggregate supply changes, then

• A) the price level increases in the short-run and decreases in the long run.
• B) there is an inflationary gap.
• C) there is a recessionary gap.
• D) in the long run, the long-run aggregate supply will decrease.

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Definitions:

Freudian Slip

An unintentional error in speech or memory believed to reveal subconscious thoughts or feelings.

Freud

Sigmund Freud, an Austrian neurologist and the founding father of psychoanalysis, a method for treating psychopathology.

Oral Personality

A psychoanalytic concept that describes individuals fixated at the oral stage, characterized by behaviors centered around oral gratification.

Freud

Sigmund Freud, the founding father of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.