In the Classical Model, How Do Shifts in Aggregate Demand

question 178

Multiple Choice

In the classical model, how do shifts in aggregate demand affect real GDP?

• A) Real GDP will remain unchanged.
• B) Increases in aggregate demand increase real GDP.
• C) Increases in aggregate demand decrease real GDP.
• D) Decreases in aggregate demand increase real GDP.

---

Definitions:

Watts Race Riot

A violent disturbance that took place in the Watts neighborhood of Los Angeles in 1965, illustrating tensions between African American residents and the police.

Lack of Opportunity

A situation where individuals or groups have limited options or chances for advancement and success.

Carpet Bombing

A method of aerial bombing where large areas are systematically bombed to destroy targets and demoralize the enemy.

Napalm

A highly flammable sticky jelly used in incendiary bombs and flamethrowers, developed during World War II.