If Policymakers Decrease Aggregate Demand,then in the Long Run

question 43

Multiple Choice

If policymakers decrease aggregate demand,then in the long run

• A)prices will be lower and unemployment will be higher.
• B)prices will be lower and unemployment will be unchanged.
• C)prices and unemployment will be unchanged.
• D)None of the above is correct.

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Definitions:

Interest Rates

The fee, shown as a percentage of the total amount loaned, that a lender imposes on a borrower for the right to use their funds.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns, encompassing methods such as buying stocks, bonds, or real estate.

Required Rate

A rephrased definition: The minimum return rate required by investors to consider investing in a particular asset or project.

Coupon Interest Rate

Stated rate of interest on a bond, defined as the coupon payment divided by the par value.