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:

\(70e^{-0.5x}\)

An exponential function representing growth or decay, where 70 is the initial quantity and \(-0.5x\) adjusts the rate of increase or decrease.

Real Number

A figure that indicates a quantity on an unbroken scale, comprising both rational and irrational numbers.

Horizontal Asymptote

A horizontal line that a graph approaches as the input or output values become infinitely large in absolute value.

\(15^{-x}\)

An expression representing the reciprocal of 15 raised to the power of x, used in mathematical and financial calculations.