If Policymakers Expand Aggregate Demand, What Happens to Inflation and Unemployment

question 141

Multiple Choice

If policymakers expand aggregate demand, what happens to inflation and unemployment in the long run?

• A) Inflation will be higher and unemployment will be lower.
• B) Inflation will be higher and unemployment will be unchanged.
• C) Inflation and unemployment will be unchanged.
• D) Both inflation and unemployment will be higher.

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Definitions:

Net Cash

The amount of cash available after accounting for all cash receipts and payments.

Cash Dividend

A sum of money given by a company to its shareholders, typically from the company's profits.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life.

Indirect Method

A technique used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to calculate net cash from operating activities.