All of the Following Are Assumptions Made by the Dynamic

question 164

Multiple Choice

All of the following are assumptions made by the dynamic model of aggregate demand and aggregate supply except

• A)aggregate demand and potential real GDP decrease continuously.
• B)the aggregate demand curve shifts to the right during most periods.
• C)potential real GDP increases continuously.
• D)the short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.

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Definitions:

National Debt

The total amount of money that a country's government has borrowed by various means.

Crowding Out

The displacement of interest-sensitive private investment that occurs when higher government deficits drive up market interest rates.

Expansionary Gap

An Expansionary Gap exists when an economy’s output exceeds its potential output, often leading to inflationary pressures.

Aggregate Demand

The aggregate need for commodities and services inside an economy at a specific general price level over a particular time frame.