An Increase in Aggregate Demand Is Beneficial in the Short

question 141

Multiple Choice

An increase in aggregate demand is beneficial in the short run because ________ but not in the long run because ________.

• A) output decreases; the unemployment rate falls
• B) the unemployment rate falls; the price level rises
• C) wages decrease; wages increase
• D) real wealth decreases; real wealth increases
• E) wages increase; the unemployment rate rises

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Definitions:

Kindling-Sensitization Model

A theory suggesting that repeated exposures to stressful events may lead to an increased sensitivity to stress and eventually contribute to the onset of psychiatric disorders.

Depressive Episode

A period marked by persistent sadness, apathy, and other symptoms that significantly impact an individual's day-to-day functioning.

Mildly Depressed

A state characterized by a low mood to a lesser degree, not meeting the full criteria for major depression.

Religiosity

The degree of religious observance, belief, or fervor in an individual's life.