The Table Gives the Aggregate Demand and Aggregate Supply Schedules

question 29

Multiple Choice

The table gives the aggregate demand and aggregate supply schedules for a nation.
-If the price level is 90,then the price level will ________ because ________.

• A)either fall or rise;markets are unstable and macroeconomic equilibrium is difficult to predict
• B)fall;the aggregate quantity demanded is less than the aggregate quantity supplied
• C)rise;the aggregate quantity demanded is less than the aggregate quantity supplied
• D)rise;the aggregate quantity demanded is greater than the aggregate quantity supplied
• E)fall;the aggregate quantity demanded is greater than the aggregate quantity supplied

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Definitions:

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Compensating Balance

A minimum bank account balance that a borrower agrees to maintain as a condition for obtaining a loan, often used to offset the bank's credit risk.

Legal Restrictions

Regulations or limitations prescribed by law that affect the actions of individuals, businesses, or governments.

Compensating Balance

A compensating balance is a minimum account balance that a borrower agrees to maintain in an account with a lender as part of a loan agreement.