For a Number of Years Country a Had Inflation of 3

question 69

Multiple Choice

For a number of years country A had inflation of 3% but for the last five years has had inflation of 6%.Country B had inflation of 4% for many years,but very recently inflation unexpectedly rose to 9%.Other things the same,in which of the countries would the higher inflation rate be more likely to reduce unemployment?

• A)both country A and country B
• B)neither country A nor country B
• C)country A but not country B
• D)country B but not country A

Understand how autonomous investments affect aggregate expenditure and its impact on the economy.

Calculate and understand the implications of the simple spending multiplier based on the marginal propensity to consume and save.

Recognize how changes in the price level influence consumption, exports, and the aggregate demand curve.

Understand the relationship between the marginal propensity to consume (MPC) and the spending multiplier.

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