When Aggregate Demand Is Low Enough to Drive Unemployment Above

question 116

Multiple Choice

When aggregate demand is low enough to drive unemployment above the natural rate,

• A) there is downward pressure on the price level,and the government may want to conduct contractionary fiscal policy.
• B) the economy is entering into an expansion,and the government may want to conduct contractionary fiscal policy.
• C) there is upward pressure on the price level,and the government may want to conduct contractionary fiscal policy.
• D) there is upward pressure on the price level,and the government may want to conduct expansionary fiscal policy.
• E) there is downward pressure on the price level,and the government may want to conduct expansionary fiscal policy.

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Definitions:

New York Federal Reserve Bank

One of the 12 regional Reserve Banks in the Federal Reserve System, playing a key role in monetary policy, financial supervision, and the payment system.

Federal Advisory Council

A group of individuals who provide advice and support to a central governing body, such as the Federal Reserve in the United States, on matters of economic policy.

Expansionary Monetary Policy

Monetary policy measures, such as lowering interest rates and increasing money supply, used by central banks to stimulate economic growth.

U.S. Dollar

The official currency of the United States, widely used as a standard of value and medium of exchange globally.