Holding the Level of Prices Fixed Implies That a Given

question 169

Multiple Choice

Holding the level of prices fixed implies that a given decrease in aggregate demand

• A) will have a smaller effect on real GDP than would be the case if prices were more flexible.
• B) will have a larger effect on real GDP than would be the case if prices were more flexible.
• C) has the same effect on real GDP as when prices are more flexible.
• D) has a smaller effect on nominal GDP than when prices are more flexible.

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Definitions:

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