An Unexpected Increase in Aggregate Demand Causes

question 129

Multiple Choice

An unexpected increase in aggregate demand causes

• A) the unemployment rate to fall, with no change in the price level.
• B) the price level to rise, but the duration of unemployment will remain constant, so the unemployment rate remains constant.
• C) simultaneously the price level to rise and the unemployment rate to fall.
• D) simultaneously the price level to fall and the unemployment rate to fall.

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Definitions:

Operating Activities

Day-to-day actions and transactions that are central to the primary business operations, including revenue and expense activities.

Indirect Method

A method used in cash flow statements to adjust net income for the changes in non-cash accounts to arrive at operating cash flow.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business.

Fixed Assets

Tangible assets, such as property, plant, and equipment, used in the operating activities of a business and not intended for sale in the normal course of business.