CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Refer to the graph below. Monetary policy that shifts the AD curve from AD0 to AD1 but does not affect the price level decreases ______.

A. nominal output but not real output
B. both real and nominal output
C. real output but not nominal output
Correct Answer: B

Since the price level is fixed, a shift of the aggregate demand curve to the left must reduce both real and nominal output.

User Contributed Comments 5

User Comment
danlan A horizontal shift changes both nominal and real output, a vertical shift changes nominal but not real output.
achu Danlan: I agree on the horizontal shift. Vertical shift, I'm not sure I agree.
cleopatraliao real output=nominal output/price level. From the graph real output decreases holding the price level constant nominal output also decreases:)
syazwan21 achu: Maybe it could be the other way around - vertical shift changes real but not nominal output.
Antoinepo Nominal Output = Real output * Index ,therefore if real output decrease, nominal will also
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