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Suppose a Shift in Aggregate Demand Creates an Economic Contraction

question 177

Multiple Choice

Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, how can they offset the initial shift?


Definitions:

Governmental Organizations

Entities established by a government to carry out various functions, ranging from service provision to regulatory enforcement.

Federal Bureaucracy

The vast administrative system that handles the day-to-day business of the U.S. federal government, composed of agencies, departments, and employees.

Iron Triangle

A term describing the policy-making relationship among the congressional committees, the bureaucracy (government agencies), and interest groups.

Interest Groups

Organizations formed to influence public policy and government decisions to benefit members' specific interests.

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