Any Non-Policy-Induced Increase in Aggregate Demand Affecting an Economy Initially

question 30

Multiple Choice

Any non-policy-induced increase in aggregate demand affecting an economy initially operating at full potential

• A) can be expected to cause an immediate episode of increased inflation regardless of the policy response.
• B) can be expected to cause an immediate episode of unemployment above the natural rate regardless of the policy response.
• C) might not cause inflation to rise if policy directed at reducing aggregate demand were enacted swiftly.
• D) might not cause inflation to rise if policy directed at increasing aggregate demand further were enacted slowly.
• E) none of the above.