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With the Self-Correcting Mechanism,if a Negative Demand Shock Occurs

Question 155

Multiple Choice

With the self-correcting mechanism,if a negative demand shock occurs,


A) a decrease in wage rates will lead to a decrease in the price level so that the economy returns to full employment
B) the price level will increase,causing equilibrium GDP to return to its original level
C) the wage rate will eventually increase,restoring GDP to its full-employment level
D) the price level will remain constant
E) there will be no effect in the long run

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