Assume the Equilibrium Level of Output Is Less Than Full

question 57

Multiple Choice

Assume the equilibrium level of output is less than full employment.To achieve full-employment equilibrium,the aggregate demand curve must shift to the right by

• A)The amount of the recessionary GDP gap.
• B)An amount less than the recessionary GDP gap because the spending increase causes the multiplier process to occur.
• C)An amount greater than the recessionary GDP gap because the spending increase raises the price level.
• D)An amount less than the recessionary GDP gap because the spending increase raises output and prices.

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Definitions:

Senescence

The process of aging where cells lose the power to divide and grow, affecting the function of organisms over time.

Myelination

The process of forming a myelin sheath around the axons of neurons to insulate them and increase the speed of neural signal transmission.

Neurotransmitter

A brain chemical that carries information from the axon of a sending neuron to the dendrites of a receiving neuron.

Corpus Callosum

A wide band of nerve fibers connecting the left and right hemispheres of the brain, facilitating interhemispheric communication.