Economics - Economics Section 1
61. A decrease in aggregate demand will least likely:
- Option : C
- Explanation : A decrease in AD lowers real GDP, increases the unemployment rate and decreases the price level.
- Option : B
- Explanation : If the economy is in expansion caused by an increase in AD, then commodity prices will increase.
- Option : C
- Explanation : At full employment, a weaker currency reduces the purchasing power of all domestic currency denominated assets. Households respond by reducing general expenditures and increasing savings. This is known as the wealth effect.
64. If both aggregate supply and aggregate demand increase, then:
- Option : B
- Explanation : Higher aggregate demand and higher aggregate supply raise real GDP and lower unemployment.
65. If both aggregate supply and aggregate demand decrease, then:
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