When Aggregate Expenditures Fall Below the Full-Employment Level of Output,which

question 2

Multiple Choice

When aggregate expenditures fall below the full-employment level of output,which of the following types of unemployment is most likely to increase?

• A)Cyclical.
• B)Seasonal.
• C)Frictional.
• D)Structural.

---

Definitions:

Opportunity Cost

The loss of potential gain from other alternatives when one particular option is chosen.

Tax Cut

A reduction in the amount of taxes that individuals or corporations owe to the government.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, with little government intervention.

Market Equilibrium

A situation in which market supply equals market demand, so there is no incentive for price changes unless external conditions change.