If Fiscal Policy Makers Increase Aggregate Demand in an Attempt

question 9

Multiple Choice

If fiscal policy makers increase aggregate demand in an attempt to decrease the unemployment rate below the natural rate of unemployment,then:

• A)the potential GDP will decrease.
• B)the potential GDP will increase.
• C)the only lasting impact of the policy is a higher price level.
• D)the only lasting impact of the policy is higher real GDP.
• E)the only lasting impact of the policy is lower real GDP.

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Definitions:

Blood Fluke

A parasitic flatworm, belonging to the genus Schistosoma, that lives in the blood vessels of humans and animals and causes schistosomiasis.

Proboscis

A lengthy extension from an animal's head, especially seen in insects, utilized for nourishment or perception.

Nemerteans

A phylum of invertebrate animals, also known as ribbon worms, characterized by their long, slender bodies and a proboscis used for hunting.

Lophophore

A unique feeding structure bearing ciliated tentacles, found in certain invertebrate phyla.