If Aggregate Demand Increases by the Amount of the Recessionary

question 1

Multiple Choice

If aggregate demand increases by the amount of the recessionary GDP gap and aggregate supply is upward-sloping,

• A)The economy will move to full employment.
• B)An AD surplus will occur.
• C)A recessionary GDP gap will still exist.
• D)An inflationary GDP gap will develop.

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Definitions:

Operating Activities

Business activities directly related to the production, sale, and delivery of a company's products or services, generating the majority of its revenue and expenses.

Cash Dividends

Cash dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.

Free Cash Flow

A measure of financial performance calculated as operating cash flow minus capital expenditures, representing the cash that a company is able to generate after spending the money required to maintain or expand its asset base.

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.