In Reality,AD Rarely ________;However,the Economy Performs as Though It Does

question 173

Multiple Choice

In reality,AD rarely ________;however,the economy performs as though it does when it ________.

• A)decreases;fluctuates with potential GDP
• B)increases;decreases at a pace much slower than potential GDP
• C)stagnates;increases at a pace much faster than potential GDP
• D)decreases;increases at a pace much slower than potential GDP
• E)decreases;increases at a pace much faster than potential GDP

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Definitions:

Nominal GDP

The market value of all final goods and services produced within a country in a specific period, measured in current prices.

Price Level

An index that measures the average of current prices of goods and services in comparison with the prices in a base year.

Money Demand Curve

A graphical representation that shows the relationship between the quantity of money people want to hold and the interest rate.

Interest Rate

The sum, as a percentage of the principal, required by a lender from a borrower for the employment of assets.