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Mandolina Mandolina
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7 years ago
Assume that the economy is initially in equilibrium at a price level of 100 and a potential GDP of $1,000 billion. If aggregate demand falls,
A) the price level will initially decline but will return to 100 when the self-correcting mechanism restores potential GDP.
B) the price level will initially rise but will return to 100 when the self-correcting mechanism restores potential GDP.
C) the price level will initially decline but will fall even further when the self-correcting mechanism restores potential GDP.
D) the price level will initially increase but will rise even further when the self-correcting mechanism restores potential GDP.
E) the price level will initially decline but will rise above 100 when the self-correcting mechanism restores potential GDP.
Textbook 
Introduction to Economic Reasoning

Introduction to Economic Reasoning


Edition: 8th
Author:
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foliogefolioge
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7 years ago
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Mandolina Author
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#2
7 years ago
Makes a ton of sense now Smiling Face with Open Mouth
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