If Fiscal Policy Makers Increase Aggregate Demand in an Attempt

question 87

Multiple Choice

If fiscal policy makers increase aggregate demand in an attempt to decrease the unemployment rate below the natural rate of unemployment,then

• A)the potential GDP level will decrease
• B)the potential GDP level will increase
• C)the only lasting impact of the policy is a higher price level
• D)the only lasting impact of the policy is greater real GDP
• E)the only lasting impact of the policy is lower real GDP

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Definitions:

Terminal Cells

Terminal cells refer to the end cells in a biological pathway or structure, often relating to neurons where signals are transmitted to other cells or systems.

Neurons

Specialized cells that convey nerve signals; they are the basic elements of the brain and nervous system.

Excitatory Neurotransmitter

A chemical substance that promotes the firing of neurons and enhances the transmission of impulses across synapses.

Neuron

A neuron is a nerve cell that is the basic building block of the nervous system, responsible for transmitting information through electrical and chemical signals.