Other Things Equal, an Increase in Aggregate Demand Will Result

question 104

Multiple Choice

Other things equal, an increase in aggregate demand will result in:

• A)an economic expansion.
• B)higher unemployment and a lower equilibrium price level.
• C)an economic recession.
• D)a decrease in equilibrium real GDP and an increase in the equilibrium level of prices.
• E)decreased economic welfare.

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Definitions:

Federal Government

The national government of a country, which holds the ultimate authority over its territories and is responsible for implementing national policies and laws.

Social Security Taxes

Taxes imposed on both employers and employees to fund the Social Security program, which provides retirement, disability, and survivor benefits.

State Unemployment Credit

A tax credit offered to employers by the state, related to unemployment insurance payments.

FUTA Purposes

Relates to the Federal Unemployment Tax Act, which imposes a payroll tax on businesses to fund state workforce agencies.