If a Decrease in the Z Factors Resulted in a Very

question 96

Multiple Choice

If a decrease in the Z factors resulted in a very large change in the price level and a very small change in aggregate output,

• A) then in the U.S. economy investment demand must not be sensitive to the interest rate.
• B) then the U.S. economy must have been on the very steep part of its short-run aggregate supply curve.
• C) then the U.S. economy must have been on the very flat part of its short-run aggregate supply curve.
• D) then the U.S. aggregate demand curve must be very steep.

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