Question
In: Economics
Other things the same, which of the following is correct? a. A decrease in the price...
Other things the same, which of the following is correct?
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Solutions
Expert Solution
A decrease in the price level is equivalent to an increase in the money supply. In both the cases, the cash in hand can buy more and increase the aggregate demand. With an increase in the money supply, the Dollar will depreciate and the AD curve will shift to the right.
The answer is "B", A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right.
Rahul Sunny answered 2 years agoRelated Solutions
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