If the Fed Responds to an Increase in Aggregate Demand

question 54

Multiple Choice

If the Fed responds to an increase in aggregate demand by increasing the quantity of money,

• A) nothing happens because aggregate demand had already increased.
• B) output will begin to decrease more rapidly than otherwise.
• C) money wage rates will fall to reduce the unemployment.
• D) there will be continued inflation.

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Definitions:

Sea Caves

Natural hollows formed by the wave action of the sea on weak points in coastal cliffs, known for their stunning landscapes and ecological habitats.

Marine Terraces

Flat, wave-cut platforms formed by the erosion of marine shores, marked by a rise in sea level or land level.

Sea Level Risen

The increase in the global average level of the oceans, attributed mainly to climate change and the melting of ice caps and glaciers.

Coastal Dunes

Natural accumulations of sand or sediment found along coastlines, formed by the wind and protecting inland areas from sea surges.