Suppose a Recession Occurs as a Result of a Negative

question 282

Multiple Choice

Suppose a recession occurs as a result of a negative supply shock,and instead of the economy naturally working its way back to equilibrium,the government uses policy to shift the aggregate demand curve to fight the recession.Using policy this way would

• A)bring real GDP back to potential GDP more quickly but would result in a permanently higher price level.
• B)bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly.
• C)quickly result in a new,higher level of real GDP and a permanently lower price level.
• D)bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP.

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Definitions:

Environmental Damage

Harm caused to the natural environment, often due to human activities, leading to degradation of ecosystems and loss of biodiversity.

Fishing Line

A fishing line is a cord used in angling, made from materials designed to be strong, durable, and often invisible underwater to catch fish.

Raising Fish

The practice of cultivating and breeding fish in controlled environments for purposes such as food production, recreation, or research.

Plants Together

The coexistence of multiple plant species within the same geographical area or ecosystem.