An Unexpected Increase in Aggregate Demand Typically Causes

question 110

Multiple Choice

An unexpected increase in aggregate demand typically causes

• A) frictional unemployment to increase but structural unemployment to decrease.
• B) the price level to increase but has no effect on the unemployment rate.
• C) the price level to increase and the unemployment rate to fall.
• D) the price level to increase and the unemployment rate to increase.

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Definitions:

Tax Exempt

Describes income, property, or transactions that are legally free from tax liability.

Common Equity

The amount of ownership in a corporation that is held by common shareholders, represented by the value of common stock plus retained earnings.

Year-end Balance Sheets

Financial statements detailing a company's assets, liabilities, and equity at the end of a fiscal year.

Retained Earnings

Profits that a company retains rather than distributes to its shareholders as dividends, often used for reinvestment.