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:

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, the superego, and reality.

Libido

A term used in psychoanalytic theory to denote the energy of the sexual drive as a component of the life instinct.

Superego

In psychoanalytic theory, the part of the personality that represents internalized ideals and provides standards for judgment (the conscience) and for future aspirations.

Folklorist

A scholar specializing in the study of folklore, including myths, legends, fairy tales, and oral traditions.