ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the price level to decrease
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Real GDP to increase
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the unemployment rate to decrease
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All of the above
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Detailed explanation-1: -Conversely, deterioration in productivity will decrease the number of units an employee can make using a similar amount of inputs and thus cause a fall in the aggregate supply. Therefore, an increase in productivity will likely cause A. the AS curve to shift upward, but has no effect on the AD curve.
Detailed explanation-2: -Price levels are leading indicators in the economy; rising prices indicate higher demand leading to inflation while declining prices indicate lower demand or deflation.
Detailed explanation-3: -Answer and Explanation: The correct answer is A. A decrease in price level. Aggregate demand shifts favorably when the money supply increases and enable more consumer purchasing power.
Detailed explanation-4: -Answer and Explanation: Since the long-run aggregate supply curve is not responsive to changes in the price level, a change in the aggregate supply would result from changes in efficiency and productivity. Thus, an increase in productivity will increase the long-run aggregate supply curve to the right.