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:

Imports

Goods or services brought into a country from abroad for sale.

Equilibrium

A situation in a market where demand equals supply, and there is no tendency for the quantities supplied and demanded to change.

Market

The institution through which buyers and sellers interact and engage in exchange.

S And D

Stands for Supply and Demand, which are the forces that determine the price of goods and services in a marketplace.