Suppose That Along the Aggregate Demand Curve, Real GDP Equals

question 84

Multiple Choice

Suppose that along the aggregate demand curve, real GDP equals $15 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal

• A) less than $15 trillion.
• B) $15 trillion.
• C) more than $15 trillion but less than $15.8 trillion.
• D) more than $15 trillion.

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Definitions:

Ratio of Prices

The comparative value of two or more goods or services, expressed as a quotient showing the cost relationship.

Fixed Income

A type of investment in which real return rates or periodic income is received at regular intervals and at reasonably predictable levels.

Slope of Budget Line

The rate at which one good can be exchanged for another without changing the overall spending, reflecting trade-offs in consumer choice.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with higher elasticity indicating a stronger response.