If an Economy Is Producing at a Level Beyond Full

question 278

Multiple Choice

If an economy is producing at a level beyond full employment, using contractionary fiscal policy to reduce aggregate demand means a tradeoff between _____ price levels and _____ output.

• A) lower; lower
• B) lower; higher
• C) higher; lower
• D) higher; higher

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Definitions:

Prenatal Development

The process of growth and development within the womb from conception to birth.

Fluid Intelligence

The capacity for deductive reasoning and the ability to use new information to solve problems; it is relatively independent of education and tends to decline in old age.

Intellectual Abilities

Refers to the mental capacities that allow individuals to learn, reason, solve problems, and adapt to new situations.

Arithmetic

A branch of mathematics dealing with the properties and manipulation of numbers.