Author Question: Use the figure above to answer this question. At a price level of 90 A) people will be forced to ... (Read 70 times)

dmcintosh · **on:** Jun 29, 2018

Use the figure above to answer this question. At a price level of 90

A) people will be forced to cut consumption so that aggregate demand will decrease.
B) the aggregate quantity demanded exceeds real GDP and inventories will decrease.
C) inventories increase and firms will increase production.
D) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.

Question 2

Suppose that the nominal quantity of money is 200 billion and the value of nominal GDP is 1 trillion. It must be the case that

A) the economy is suffering from inflation.
B) the average price paid for a typical good is 5.
C) there will be a shortage of money balances in the economy.
D) the velocity of circulation is 5.