If an Economy Is Operating Along the Keynesian Section of the Aggregate

question 22

Multiple Choice

If an economy is operating along the Keynesian section of the aggregate supply curve,then an increase in aggregate demand will result in:

• A)an increase in inflation and an increase in real GDP.
• B)no change in the price level and a decrease in unemployment.
• C)a decrease in the price level and a decrease in unemployment.
• D)no change in the price level and an increase in unemployment.
• E)no change in the price level, but the effect on real GDP is indeterminate.

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Definitions:

Maturity

Maturity refers to the date on which the principal or final payment is due on a debt instrument, after which the debt is considered repaid.

Futures Position

A contractual obligation to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Underlying Commodity

The basic physical asset upon which futures contracts and derivatives are based.

Maturity

The specified date on which the principal amount of a bond, loan, or other financial instrument is due to be repaid.