A Shift from AD₁ to AD₂ in Figure 11

question 22

Multiple Choice

A shift from AD₁ to AD₂ in Figure 11.2 will

• A)Worsen the existing unemployment problem.
• B)Reduce,but not close,the GDP gap.
• C)Cause significant inflation.
• D)Eliminate the GDP gap.

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Definitions:

Interest Rate

The percentage of a loan charged as cost to the borrower for the use of the money.

Capital Projects

Long-term investments made by companies or governments to create, improve, or maintain physical assets.

Interest Rate

The percentage charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.

Present Value

The present value of a future amount of money or a series of cash flows, calculated using a predetermined rate of return.