When USAggregate Demand and Long-Run Aggregate Supply Decreased During the Great

question 149

Multiple Choice

When U.S.aggregate demand and long-run aggregate supply decreased during the Great Recession,

• A) unemployment decreased.
• B) real gross domestic product (GDP)decreased.
• C) real gross domestic product (GDP)increased.
• D) real gross domestic product (GDP)was unaffected.
• E) the price level decreased.

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Definitions:

Managed Float

A currency exchange rate policy where the central bank allows the currency value to fluctuate in the foreign exchange market but intervenes to prevent excessive movements.

Fixed Rate System

A monetary system in which exchange rates are set and maintained at a certain level by a government or central bank.

Flexible Exchange Rates

A system in which the worth of a currency is permitted to vary based on the foreign exchange market, free from direct governmental interference.

Economic Growth

An increase in the amount of goods and services produced per head of the population over a period of time, typically seen as an indicator of the economic health of a country.