If an Economy at Potential GDP Experiences a Demand Shock

question 143

Multiple Choice

If an economy at potential GDP experiences a demand shock that shifts the aggregate demand curve rightward, there will be

• A) an eventual leftward shift in the short-run aggregate supply curve.
• B) upward pressure on money wage rates.
• C) unemployment below the natural rate.
• D) All of the above answers are correct.

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Definitions:

Program Revenues

Income directly generated by specific programs or services, typically reported by governmental entities to reflect how resources are tied to particular activities.

Fiscally Independent

Having the authority to raise revenue through taxation and make spending decisions independently, typically referring to governmental units.

CAFR

The Comprehensive Annual Financial Report, a set of U.S. government financial statements that provides a detailed presentation of a state, municipality, or other governmental entity's financial condition.

Introductory

Pertaining to the beginning or initial stage of something, often used to describe the initial phase of a project, course, or period.