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:

California Unionized Supermarkets

Supermarkets in California that have their workforce represented by labor unions, impacting wage levels, working conditions, and labor-management relations.

Strikes

Work stoppages initiated by employees as a form of protest, typically aiming for better wages, conditions, or benefits from their employers.

U.S. Economy

The economic system of the United States characterized by a mixed economy that supports both private and public enterprises.

Pure Monopsony

A market condition where there is only one buyer for many sellers, giving the buyer significant power over prices and terms of sale.