If Policymakers Expand Aggregate Demand, What Happens to Inflation and Unemployment

question 39

Multiple Choice

If policymakers expand aggregate demand, what happens to inflation and unemployment?

• A) Inflation falls but unemployment rises.
• B) Inflation and unemployment fall.
• C) Inflation and unemployment rise.
• D) Inflation rises but unemployment falls.

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Definitions:

Work in Process

Inventory that includes all the materials, labor, and overhead costs for products in the production process but not yet completed.

Work in Process

Inventory items that are in the production process but are not yet complete.

Finished Goods

Items that are fully manufactured but remain unsold and undistributed to the final consumer.

Raw Materials

The basic materials from which products are made, used at the start of the production process.