If the Government Stimulates Aggregate Demand in Response to an Adverse

question 34

Multiple Choice

If the government stimulates aggregate demand in response to an adverse supply shock,

• A)the inflation rate will increase but frictional unemployment will decrease
• B)the unemployment rate will increase but the inflation rate will decline
• C)an increase in unemployment can be avoided but only at the cost of increased inflation
• D)high inflation can be avoided but the rate of unemployment will increase
• E)the inflation and unemployment rates will be reduced simultaneously

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Definitions:

Spontaneous Remission

An unexpected improvement or cure from a disease or condition that occurs without medical intervention.

Psychological Disorders

Mental health conditions characterized by disturbances in thought, behavior, or emotion that lead to personal distress or impaired functioning.

Formal Treatment

Structured medical or therapeutic intervention designed to treat a specific condition or disorder.

Counterconditioning

A behavioral therapy technique involving the conditioning of an unwanted behavior or response to a stimulus into a desired behavior by association with a positive or negative stimulus.