Explain the Short-Run Effects on Output and the Price Level

question 151

Short Answer

Explain the short-run effects on output and the price level from a decrease in the aggregate-demand curve.

---

Definitions:

Inflation Rate

The rate at which prices for all goods and services climb, resulting in a decrease in the ability to purchase.

Holding-Period Return

The return on an investment over the period it is held.

Dividend

A portion of a company's earnings that is paid to shareholders, usually on a quarterly basis.

Nominal Rate of Interest

The rate of interest before adjustments for inflation, reflecting the face-value rate of interest paid on a loan or received from an investment.