Question

In: Economics

8. Beginning at a full employment equilibrium, a decrease in aggregate demand in the short run...

8. Beginning at a full employment equilibrium, a decrease in aggregate demand in the short run will tend to cause a:

D. Higher price level and a lower employment level.
B. Lower price level and a lower employment level.
A. Lower price level and a higher employment level.

C. Higher price level and a higher employment level.

9. Which of the following results if the aggregate quantity supplied exceeds the aggregate quantity demanded?

A. Aggregate demand shifts to the right.
B. Aggregate supply shifts to the left.
D. A surplus causes the price level to fall.
C. A surplus causes the price level to rise.

Solutions

Expert Solution

8. Beginning at a full employment equilibrium, a decrease in aggregate demand in the short run will tend to cause a:
B. Lower price level and a lower employment level.
Explanation: The aggregate demand will shift to the left. Leading to lower price level and output level.

9. Which of the following results if the aggregate quantity supplied exceeds the aggregate quantity demanded?
D. A surplus causes the price level to fall.
Explanation: There exists situation of surplus when quantity supplied is greater than quantity demanded.


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