Suppose Aggregate Demand Fell

question 119

Multiple Choice

Suppose aggregate demand fell. In order to stabilize the economy, what might the government do?

• A) increase the interest rate
• B) decrease the money supply
• C) increase government spending
• D) decrease the government expenditures

---

Definitions:

Economic Efficiency

Refers to the optimal production and distribution of resources to maximize social welfare and minimize waste.

Real Wage

The purchasing power of wages, adjusted for inflation, indicating the quantity of goods and services that can be bought.

Purchasing Power

The ability of an individual or entity to buy goods and services, essentially reflecting the amount of goods or services that one unit of currency can buy.

Nominal Wage

The wage measured in dollars of the year in question; the dollar amount on a paycheck.