When aggregate demand meets aggregate supply in the horizontal portion of the aggregate supply curve,
A) a decrease in demand will cause prices to rise but no change in output.
B) a decrease in demand will cause output to rise but no change in prices.
C) a decrease in demand will cause prices to fall but no change in output.
D) a decrease in demand will cause output to fall but no change in prices.
Question 2
The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music) the
A) opportunity cost of production is less in Japan.
B) absolute cost of production is less in the United States.
C) absolute cost of production is less in Japan.
D) opportunity cost of production is less in the United States.
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