A Simultaneous Rise in Aggregate Demand and Fall in Short-Run

question 8

Multiple Choice

A simultaneous rise in aggregate demand and fall in short-run aggregate supply will definitely

• A) raise the price level,but there is not enough information to know how Real GDP will change.
• B) lower Real GDP,but there is not enough information to know how the price level will change.
• C) raise the price level and Real GDP.
• D) raise Real GDP,but there is not enough information to know how the price level will change.
• E) raise the price level and lower Real GDP.

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Definitions:

Pessimist

A pessimist is an individual who tends to see the worst aspect of things or believe that the worst will happen, often focusing on negatives rather than positives.

Decision Trees

A graphical tool that helps in decision-making by laying out different strategies and their possible outcomes in a tree-like diagram.

Sequential Problems

Issues or tasks that must be resolved or completed in a specific, linear order, often dependent on the completion of the previous step.

Perfect Information

A situation in which all participants have access to all relevant information, typically assumed in economic models to facilitate optimal decision-making.