Multiple Choice
Consider an economy starting from a position of full employment. Which one of the following changes does not occur as a result of a decrease in aggregate demand?
A) The price level decreases.
B) The level of real GDP decreases in the short run.
C) A recessionary gap arises.
D) Factor prices decrease in the long run, shifting the short-run aggregate supply curve rightward.
E) The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.
Correct Answer:
Verified
Correct Answer:
Verified
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