Increases in Aggregate Demand Are Likely to Create

question 30

Multiple Choice

Increases in aggregate demand are likely to create

• A) deflation during recessions
• B) inflation when the output gap is quite negative
• C) higher output when the output gap is negative, and inflation when output is at capacity
• D) reductions in output if the output gap is already positive
• E) both inflation and recession

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Definitions:

Fossil Fuels

Natural fuels such as coal, oil, and natural gas, formed from the decomposed remains of plants and animals over millions of years, and used for energy.

Service Industries

Service industries are businesses that provide intangible products or services to consumers, such as healthcare, education, and financial services.

Educational Requirements

The specific level of education or training necessary to qualify for a particular job or profession.

Consumption

The act of using goods and services to satisfy needs and desires, often analyzed in economics and environmental sciences for its effects on society and the planet.