Multiple Choice
Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?
A) Potential real GDP increases continuously.
B) The aggregate demand curve shifts to the right during most periods.
C) The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.
D) Aggregate demand and potential real GDP decrease continuously.
E) Potential GDP does not depend on the price level.
Correct Answer:
Verified
Correct Answer:
Verified
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