In the Aggregate Demand-Aggregate Supply Model,an Increase in the Price

question 166

Multiple Choice

In the aggregate demand-aggregate supply model,an increase in the price level will

• A) increase money demand,raise the interest rate,reduce aggregate expenditure,and decrease equilibrium real GDP
• B) decrease money demand,lower the interest rate,increase aggregate expenditure,and increase real GDP
• C) increase the money supply,lower the interest rate,increase aggregate expenditure,and increase real GDP
• D) decrease the money supply,raise the interest rate,reduce aggregate expenditure,and decrease real GDP
• E) not change money supply,money demand or the interest rate,but will shift the aggregate demand curve to the right

---

Definitions:

Popular Sovereignty

The idea that a state's power and governance are established and upheld with the approval of its citizens, via their chosen delegates.

Articles of Confederation

The first constitution of the United States, ratified in 1781, which established a weak federal government and was eventually replaced by the current U.S. Constitution in 1789.

Armed Forces

The combined military forces of a nation, including its army, navy, air force, and other branches, responsible for defense and other state-sanctioned activities.

Continental Congress

The legislative assembly of representatives from the American colonies that convened during the Revolutionary War to coordinate resistance against British rule and ultimately declared independence.