A decrease in aggregate demand results in a(n) ________ in the ________.Question 10Answera.recession; long runb.expansion; short runc.expansion; long rund.recession; short run
Question
A decrease in aggregate demand results in a(n) ________ in the ________.Question 10Answera.recession; long runb.expansion; short runc.expansion; long rund.recession; short run
Solution
The answer is d. recession; short run.
Here's why:
Aggregate demand is the total demand for all goods and services in an economy. When aggregate demand decreases, it means that consumers and businesses are spending less. This decrease in spending can lead to a slowdown in economic activity, which is often referred to as a recession.
This typically happens in the short run because it takes time for the effects of decreased spending to ripple through the economy. In the long run, the economy may adjust and return to equilibrium, but in the short run, a decrease in aggregate demand can lead to a recession.
Similar Questions
An increase in aggregate demand causes an increase in ________ only in the short run, but causes an increase in ________ in both the short run and the long run. a. the price level; real GDP b. real GDP; the price level c. real GDP; real GDP d. the price level; the price level
A decrease in the price level results in a(n) ________ in the quantity of real GDP demanded because a lower price level ________ consumption, investment, and net exports.Question 9Answera.decrease; decreasesb.decrease; increasesc.increase; increasesd.increase; decreases
Investment spending ________ during a recession and ________ during an expansion. a. declines; increases b. declines; declines c. increases; declines d. increases; increases
A decrease in aggregate demand will:Question 7Answera.cause inflation.b.decrease unemployment.c.cause the short-run Phillips curve to shift to the right.d.move the economy to a lower point on the short-run Phillips curve.
Which of the following shifts the short-run aggregate supply curve?Group of answer choicesa change in the price levela change in the price of oila change in short-run aggregate demandAll of these
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