Suppose That the Correlation Between Government Spending and the Differ-

question 9

Multiple Choice

Suppose that the correlation between government spending and the differ- ence between actual and potential GDP were to become more strongly cor- related; that is, suppose that an increase or decrease in the GDP gap causes an enlarged increase or decrease, respectively, in government spending.

• A) The aggregate demand curve should become steeper because monetary policy is less effective.
• B) The aggregate demand curve should become steeper because monetary policy is more effective.
• C) The aggregate demand curve should become flatter because monetary policy is more effective.
• D) The aggregate demand curve should become flatter because monetary policy is less effective.
• E) There should be no change in the slope of the aggregate demand curve.

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Definitions:

Admission

The process or permission to enter a place, institution, or similar, often involving the fulfillment of specific requirements.

Mortality Data

Information and statistics related to death rates within a population over a specified period.

Canada

A country located in the northern part of North America, known for its vast landscapes, multicultural diversity, and as the second-largest country by land area in the world.

Deaths

The termination of all biological functions that sustain a living organism.