Assume the Equilibrium Level of Output Is Less Than Full

question 7

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:

Hypoactive

Describing a lower than normal level of activity, either in general terms or referring specifically to certain bodily functions or parts.

Arousal Deviation

A divergence in the level of physiological or psychological arousal from an individual's normal baseline or optimum level, which can affect behavior and performance.

Social Support Theory

A theory suggesting that the perception or reality of having support from others can significantly impact an individual’s health and well-being.

Social Relationships

Connections between individuals in a society, formed by emotional bonds and interactions, which can significantly influence behavior and well-being.