If the Economy's AS Curve Is Very Steep and There

question 111

Multiple Choice

If the economy's AS curve is very steep and there is a negative aggregate demand shock,the result will be

• A)an increase in the price level and a decrease in real national income.
• B)an increase in both the price level and real national income.
• C)a decrease in the price level with almost no change in real national income.
• D)a decrease in the price level and an increase in real national income.
• E)no change in either price level or output.

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Definitions:

Long-term Loss

A loss realized on the sale or exchange of a capital asset held for more than one year.

Gift Tax

A tax on the transfer of assets or money from one person to another without receiving something of equal value in return, in excess of annual and lifetime exemptions.

Section 1231

A tax provision that allows for the preferential tax treatment of gains and losses on the sale or exchange of business property and assets held for more than one year.

Depreciation

An accounting method used to allocate the cost of a tangible or physical asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.