Use the Following Graph to Answer the Next Six Questions

question 120

Multiple Choice

Use the following graph to answer the next six questions. This graph depicts an economy where aggregate demand has decreased, with no change in either short-run aggregate supply (SRAS) or long-run aggregate supply (LRAS) .

-During the Great Depression,the aggregate price level fell by 20% as depicted in the graph,suggesting that:

• A) both aggregate demand and long-run aggregate supply decreased during the Great Depression.
• B) the primary cause of the Great Depression was a decrease in aggregate demand.
• C) aggregate demand decreased and long-run aggregate supply increased during the Great Depression.
• D) aggregate demand decreased and short-run aggregate supply increased during the Great Depression.
• E) long-run aggregate supply increased whereas short-run aggregate supply decreased during the Great Depression.

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Definitions:

Residuals

Differences between observed values and estimated values in statistical models, indicating the disparity from actual to predicted results.

Errors

Mistakes or inaccuracies in data, calculations, or actions that can alter outcomes and interpretations.

Normally Distributed

Describes a distribution that is symmetrical, bell-shaped, and characterized by its mean, median, and mode being equal, commonly occurring in natural and social phenomena.

Oil Quality

The measure and characteristics of oil, including its viscosity, purity, and ability to perform effectively under specified conditions.