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Solved: During stagflation, what happens to the aggregate price level and real GDP
Chapter 0, Problem 3(choose chapter or problem)
During stagflation, what happens to the aggregate price level and real GDP? Aggregate price level Real GDP a. decreases increases b. decreases decreases c. increases increases d. increases decreases e. stays the same stays the same
Questions & Answers
QUESTION:
During stagflation, what happens to the aggregate price level and real GDP? Aggregate price level Real GDP a. decreases increases b. decreases decreases c. increases increases d. increases decreases e. stays the same stays the same
ANSWER:Step 1 of 3
When in the economy, the price level rises, leading to an inflationary situation. With the rise in the price level, the economy experiences a slow down; thus, a fall in the real GDP. The combination of stagnation and inflation is termed stagflation.