Imagine a 45°-line (Keynesian cross) diagram in which the upward-sloping aggregate expenditure curve intersects the 45°-line at point A. The economy is currently in macroeconomic equilibrium at output level Y.. Suppose that the price level increases. If the price level increases, the aggregate expenditures line will shift down The new equilibrium levels of GDP and expenditures will be OA. where the new AE line intersects the 45°-line. OB. unchanged. OC. anywhere on the new AE line. OD. where the new AE line interesects the original AE line.

Imagine a 45°-line (Keynesian cross) diagram in which the upward-sloping aggregate expenditure curve intersects the 45°-line at point A. The economy is currently in macroeconomic equilibrium at output level Y.. Suppose that the price level increases. If the price level increases, the aggregate expenditures line will shift down The new equilibrium levels of GDP and expenditures will be OA. where the new AE line intersects the 45°-line. OB. unchanged. OC. anywhere on the new AE line. OD. where the new AE line interesects the original AE line.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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