Use the Following Graph to Answer the Following Questions

question 142

Multiple Choice

Use the following graph to answer the following questions.The graph depicts an economy where aggregate demand has decreased.Note that long-run aggregate supply remains changed.

-The graph shows a decrease in the price level due to a decrease in aggregate demand.Real gross domestic product (GDP) ,however,does not change.If this were an accurate description of how an economy responds during a recession,which of the following would be an appropriate government response to a decrease in aggregate demand?

• A) The government should make an effort to control prices and limit inflation.
• B) The government should attempt to stimulate short-run aggregate supply.
• C) The government should take active steps to promote full employment.
• D) The government should let the economy adjust to full employment on its own.
• E) The government should restrict international trade and immigration.

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Definitions:

Hundred-Thousandths

A decimal fraction represented as one part in a hundred thousand, indicating a very small quantity in precise calculations.

Decimal Point

The period between two numerals.

Multiplication

A basic mathematical operation symbolized by the sign "×", representing the repeated addition of a number by itself a specified number of times.

Monetary Products

Financial instruments or assets that can be used for transactions, savings, or investments, including currency, stocks, bonds, and savings accounts.