If Prices Are Inflexible, Then a Negative Demand Shock Will

question 106

Multiple Choice

If prices are inflexible, then a negative demand shock will lead to:

• A) A short-run increase in real GDP
• B) A short-run decrease in real GDP
• C) A short-run decrease in prices
• D) No change in real GDP in the short run

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Definitions:

Obsessive-compulsive Disorder

A mental disorder characterized by recurrent, unwanted thoughts (obsessions) and/or repetitive behaviors (compulsions).

Generalized Anxiety Disorder

Psychological disorder marked by persistent anxiety for at least six months, and in which the individual is unable to specify the reasons for the anxiety.

Insomnia

A sleep disorder characterized by trouble falling or staying asleep, leading to impaired daytime functioning.

Selective Serotonin Reuptake Inhibitors

These are a class of drugs commonly used as antidepressants in the treatment of depression, anxiety disorders, and some personality disorders by increasing the amount of serotonin in the brain.