Given: In the Great Recession that began in 2007-8, many workers becomepessimistic about their future employment, which caused them to save more andspend less. Many employees lost their jobs, which caused them to spend less. TheAggregate Demand Curve shifted to the left <--, to show a decrease in demand. (Payclose attention to the direction of the shift of the Aggregate Demand Curve --to theleft!)Exhibit 6 Three Ranges of the Aggregate Supply CurvePrice Level(CPI)AD₁ ADO8 28KeynesianRangeYKкASIntermediateRangReal GDPClassicalRangeFullemployment Given: As shown, the economy was on the intermediate range of the aggregatesupply curve when the Aggregate Demand Curve shifted left from ADo to AD1:Question: In this above situation, which of the following answers is correct?a) Both real GDP and the price level would fall.b) Both real GDP and the price level would rise.c) Real GDP will rise and the price level would fall.d) Real GDP will fall and the price level would rise.

The Great Recession had a profound impact on both aggregate demand and real GDP, reflecting the…

Given: As shown, the economy was on the intermediate range of the aggregate supply curve when the Aggregate Demand Curve shifted left from ADo to AD1: Question: In this above situation, which of the following answers is correct? a) Both real GDP and the price level would fall. Ob) Both real GDP and the price level would rise. Oc) Real GDP will rise and the price level would fall. d) Real GDP will fall and the price level would rise.

Given: As shown, the economy was on the intermediate range of the aggregate supply curve when the Aggregate Demand Curve shifted left from ADo to AD1: Question: In this above situation, which of the following answers is correct? a) Both real GDP and the price level would fall. Ob) Both real GDP and the price level would rise. Oc) Real GDP will rise and the price level would fall. d) Real GDP will fall and the price level would rise.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 6PA

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