Figure 15-4 -In Figure 15-4,if Initial Equilibrium Is at Point C and Point

question 32

Multiple Choice

Figure 15-4
-In Figure 15-4,if initial equilibrium is at point C and there is an anticipated decrease in aggregate demand from A D₂ to A D₁ due to an anticipated decrease in the money supply,then

• A)the economy will move directly from point C to point A without passing through point D.
• B)the economy will move directly from point C to point D,and will remain at point D in the long run.
• C)the price level will shift to P₂ in the short run.
• D)the price level will shift to P₂ in the long run.

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Definitions:

Standard of Living

The degree of wealth and material comfort available to a person or community.

Aggregate Expenditures

are the total amount of spending on goods and services in an economy at a given level of income during a specified period.

Recession

A phase of short-term economic downturn characterized by decreased trading and industrial output, generally recognized by a drop in Gross Domestic Product across two consecutive quarters.

National Debt

The aggregate financial obligations incurred by a government of a country through borrowing.