Author Question: Consider an economy in equilibrium, and assume no change in aggregate demand. An earthquake that ... (Read 54 times)

ts19998 · **on:** Jun 30, 2018

Consider an economy in equilibrium, and assume no change in aggregate demand. An earthquake that destroys many factories across the country would result in a(n):
a. increase in the average price level and a decrease in real GDP.
b. increase in the average price level and no change in real GDP.
c. increase in the average price level and an increase in real GDP.
d. decrease in the average price level and an increase in real GDP.
e. decrease in the average price level and a decrease in real GDP.

Question 2

To assess whether or not a good is normal or inferior, economists are interested in the cross price elasticity of demand.
a. True
b. False
Indicate whether the statement is true or false