When There Is Excess Aggregate Demand in the Economy

question 92

Multiple Choice

When there is excess aggregate demand in the economy,

• A)Desired fiscal restraint equals the AD excess divided by the multiplier.
• B)The GDP gap is positive.
• C)Full-employment output is higher than equilibrium output.
• D)Full-employment output is less than equilibrium output.

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Definitions:

Placebo Effect

A beneficial effect produced by a placebo drug or treatment, which cannot be attributed to the properties of the placebo itself, and must therefore be due to the patient's belief in it.

Experimenter Effect

The influence that the experimenter's behavior, expectations, or personality may have on the outcomes of a psychological experiment.

Critical Thinking

The process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and evaluating information to reach an answer or conclusion.

Authority

The power or right to give orders, make decisions, and enforce obedience, often held by figures or institutions in leadership positions.