If Fiscal Policy Makers Increase Aggregate Demand in an Attempt

question 87

Multiple Choice

If fiscal policy makers increase aggregate demand in an attempt to decrease the unemployment rate below the natural rate of unemployment,then

• A)the potential GDP level will decrease
• B)the potential GDP level will increase
• C)the only lasting impact of the policy is a higher price level
• D)the only lasting impact of the policy is greater real GDP
• E)the only lasting impact of the policy is lower real GDP

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Definitions:

Location Parameter

A parameter in probability distributions that determines the location or central tendency of the distribution.

Scale Parameter

A parameter in statistical or mathematical models that measures the scale or level of concentration of a distribution or data set.

Probability

The measure of the likelihood that a particular event will occur, expressed as a number between 0 and 1.

Transponders

Devices that transmit a responding signal when they receive a designated signal, used in various applications like aviation, satellite communication, and toll collection.