Within the AD/AS Model, If an Unanticipated Reduction in Aggregate

question 80

Multiple Choice

Within the AD/AS model, if an unanticipated reduction in aggregate demand results in less than the full-employment rate of output,

• A) the natural rate of unemployment will increase.
• B) long-run aggregate supply will increase.
• C) lower resource prices and declining interest rates will direct the economy back to full employment.
• D) higher resource prices and rising interest rates will direct the economy back to full employment.

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Definitions:

Sensory Deprivation Experiments

Research studies where subjects are isolated from sensory input to study the effects on cognition, perception, and other psychological aspects.

Cognitive Tasks

Activities or exercises that require mental processes such as perception, memory, and reasoning.

Aversive Effects

Unpleasant or harmful outcomes that can result from a certain action or condition, leading to avoidance behavior.

Efficient Human Functioning

Optimal performance of the human body and mind, often in reference to health, productivity, or well-being.