When the Economy Is Hit by a Negative Demand Shock

question 55

Multiple Choice

When the economy is hit by a negative demand shock and the central bank pursues policies to increase aggregate demand to its initial level,then

• A)inflation will be lower.
• B)output will be at its potential.
• C)output will be lower.
• D)inflation will be unchanged.
• E)both B and D.

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Definitions:

Consolidated Financial Statements

Financial statements that represent the combined financial position and results of operations of a parent and its subsidiaries, presented as those of a single economic entity.

Domestic Stock Exchange

A marketplace within a country where stocks, bonds, and other securities are bought and sold.

National GAAP

The set of accounting standards and principles recognized by a specific country to guide financial reporting and auditing.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.