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Author Question: When will a decrease in aggregate demand not result in a lower inflation rate in the short run? ... (Read 80 times)

james

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on: Jun 29, 2018
When will a decrease in aggregate demand not result in a lower inflation rate in the short run?
 
  What will be an ideal response?

Question 2

Over the last three decades in the United States, services have become a smaller fraction of GDP relative to goods.
 
  Indicate whether the statement is true or false


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Chou

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A decrease in aggregate demand will not result in a lower inflation rate in the short run if there is no change in the price level as a result of the decrease in aggregate demand. If, for example, aggregate supply decreases and potential GDP decreases at the same time that aggregate demand is decreasing, the inflation rate may remain unchanged.

Answer to Question 2

FALSE


james

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

raenoj

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Reply 3 on: Yesterday
Excellent

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