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Starting from a Situation of Full Employment, a Decrease in Aggregate

Question 178

Multiple Choice

Starting from a situation of full employment, a decrease in aggregate demand ________ the price level, leading to ________.


A) raises; an inflationary gap
B) lowers; a recessionary gap
C) raises; a recessionary gap
D) lowers; an inflationary gap
E) does not change; a decrease in potential GDP

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