Fiscal Policy Refers to the Idea That Aggregate Demand Is

question 54

Multiple Choice

Fiscal policy refers to the idea that aggregate demand is affected by changes in

• A)the money supply.
• B)government spending and taxes.
• C)trade policy.
• D)All of the above are correct.

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Definitions:

Favorable Supply Shock

An unexpected event that increases the supply of a product or service, leading to a lower equilibrium price and/or an increase in the equilibrium quantity.

Inflation

The pace at which prices for goods and services generally ascend, causing buying power to decline.

Stagflation

A period of falling output and rising prices.

Hyperinflation

An extremely high and typically accelerating rate of inflation, often exceeding 50% per month.