If the RBA Responds to an Initial Increase in Aggregate

question 46

Multiple Choice

If the RBA responds to an initial increase in aggregate demand by increasing the quantity of money,

• A)real GDP will begin to decrease more rapidly than if the quantity of money had remained constant.
• B)money wages will fall to reduce unemployment.
• C)there will be no inflationary gap.
• D)there is a risk of continued inflation.

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Definitions:

Future Income

Anticipated earnings or revenue in the coming periods, often considered in the context of budgeting and financial planning.

Durability

The ability of something to withstand wear, pressure, or damage, thus extending its useful life.

Proximity

The physical or psychological closeness between people, which can influence relationships and social interactions.

Similarity

The state of being alike or having attributes in common, often used to describe relationships or comparisons between objects, ideas, or individuals.