For a Given Shock to Aggregate Demand That Moves the Economy

question 9

Multiple Choice

For a given shock to aggregate demand that moves the economy out of equilibrium in the complete model, the departure of GDP from potential lasts longer

• A) the larger are the actual and expected inflation terms initially.
• B) the smaller are the actual and expected inflation terms initially.
• C) the smaller is the sensitivity of inflation to the GDP gap.
• D) the more rapidly the labor market responds to disequilibrium.
• E) none of the above.

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Definitions:

Manipulative

Characterized by unscrupulous control or influence over a person or situation for one's own advantage.

Equal

Having the same rights, status, and opportunities as another or others, without discrimination or difference in treatment.

Word Picture

Short statement or story that illustrates or describes an emotion; word pictures often use a simile (a comparison using the word like or as) to clarify an image.

Onomatopoetic Image

A visual representation that mimics the sound of the object or action it depicts, invoking auditory associations.