The Change in Aggregate Demand That Results from Fiscal Expansion

question 121

Multiple Choice

The change in aggregate demand that results from fiscal expansion changing the interest rate is called the

• A)multiplier effect.
• B)crowding-out effect.
• C)accelerator effect.
• D)Ricardian equivalence effect.

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Definitions:

Unemployment Rate

The share of the labor market that is unoccupied but searching for jobs.

Cyclical Unemployment

Unemployment that arises during periods of economic downturn or recession, reflecting the overall health of the economy rather than individual or structural factors.

Frictional

Pertaining to the period of time and inefficiency in processes where resources, especially labor, move from one employment to another, contributing to transient joblessness.

Unemployment Rate

The portion of the labor market that is out of work and actively pursuing job opportunities.