If There Is an Unanticipated Increase in Aggregate Demand, Then

question 52

Multiple Choice

If there is an unanticipated increase in aggregate demand, then according to new classical economics, the economy will self-correct with a(n) :

• A) Decrease in short-run aggregate supply, so output returns to its initial level, but the price level rises
• B) Decrease in short-run aggregate supply, so output increases and the price level rises
• C) Decrease in short-run aggregate supply, so output returns to its initial level and the price level falls
• D) Increase in short-run aggregate supply, so output increases and the price level rises

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Definitions:

Measuring

The process of determining the size, quantity, or degree of something using instruments or tools designed for such purposes.

Correlation Coefficients

Statistical measures that indicate the extent to which two variables fluctuate together, showing the strength and direction of their relationship.

Statistics

The science of collecting, analyzing, interpreting, presenting, and organizing data.

Numbers

Quantitative data or values used to measure, evaluate, or compare aspects of a business or its operations.