If Higher GDP Stems from an Increase in Aggregate Demand

question 85

Multiple Choice

If higher GDP stems from an increase in aggregate demand, then it is likely that:

• A) the level of inflation will also increase.
• B) aggregate supply will decrease.
• C) investments in infrastructure will reduce.
• D) unemployment rate will also increase.

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Definitions:

Externalities

Economic impacts of a product or service on parties who do not directly participate in the transaction, which can be negative (pollution) or positive (vaccination benefits).

Referent Power

A form of influence based on the charisma and interpersonal appeal of the leader, rather than on formal authority.

Positive Relationship

A connection between two or more entities characterized by mutual respect, cooperation, and beneficial outcomes for all involved.

Coercive Power

The ability of a person or organization to force others to comply with demands or orders through threats or punishment.