Other Things Equal, the Steeper the Aggregate Supply Curve, the

question 7

Multiple Choice

Other things equal, the steeper the aggregate supply curve, the

• A) greater the expansionary effect of an increase in aggregate demand.
• B) smaller the inflationary effect of an increase in aggregate demand.
• C) smaller the recessionary effect of a decrease in aggregate demand.
• D) greater the expansionary effect of a decrease in aggregate demand.
• E) smaller the recessionary effect of an increase in aggregate demand.

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Definitions:

U.S. Treasury

The government department responsible for managing federal finances, including issuing currency and managing public debt.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives).

Twin Deficits

The situation where a country has both a fiscal deficit (government spending exceeds revenue) and a current account deficit (imports exceed exports).

Interest Rates

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.