In the Aggregate Demand-Output Model, If Aggregate Demand Is Less

question 32

Multiple Choice

In the aggregate demand-output model, if aggregate demand is less than GDP, then:

• A) inventory is unchanged.
• B) inventory is depleted.
• C) employment increases.
• D) GDP decreases.

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Definitions:

Temporarily Cause Unemployment

Situations or policies that lead to a short-term increase in unemployment, as workers transition between jobs or industries adjust to new conditions.

Sectoral Shifts

Changes in the economic landscape that cause resources (like labor) to move from one industry or sector to another, often due to technological changes or globalization.

Frictional Unemployment

Short-term unemployment that occurs when transitioning between jobs or entering the workforce.

Unemployment Insurance

Unemployment insurance is a government program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.