When an Aggregate Demand Shock Hits the Economy ________

question 58

Multiple Choice

When an aggregate demand shock hits the economy ________.

• A)there is no conflict for the central bank between pursuing price or output stability because of the divine coincidence
• B)the same long-run equilibrium real interest rate is reached whether the central bank intervenes or not
• C)the long-run level of output is unaffected
• D)all of the above
• E)none of the above

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Definitions:

Withdrawal Reflex

An automatic response to a painful stimulus that involves the immediate removal of the body part from the source of pain.

Stretch Reflexes

Reflex actions initiated by stretching the muscles, which in turn respond by contracting, contributing to posture and locomotion.

Proper Posture

The alignment and positioning of the body in a way that reduces stress on muscles, joints, and ligaments during activity or at rest.

Lateral Gray Horns

Regions located in the spinal cord that contain neuron cell bodies involved in the control of autonomic (involuntary) functions.