The Nation of Hyperbole Is in a Recession,and the Government

question 76

Multiple Choice

The nation of Hyperbole is in a recession,and the government decides to increase taxes and reduce government spending to reduce the growing deficit.This will ________ aggregate demand and will likely ________ real GDP and employment.

• A)increase; increase
• B)increase; decrease
• C)decrease; decrease
• D)decrease; increase

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Definitions:

Lagging Economic Indicator

Refers to statistics that tend to change after the economy has already begun to follow a particular trend, and are used to confirm patterns seen in leading indicators.

Unemployment Rate

The proportion of the workforce that is unemployed and actively looking for work.

Price Level

An index indicating the general pricing trends in an economy, reflecting the cost living and purchasing power.

Aggregate Output

A composite measure of all final goods and services produced in an economy during a given period; real GDP.