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:

Federal Reserve Act

A U.S. legislation in 1913 that established the Federal Reserve System as the central banking system of the United States, designed to provide the country with a safer, more flexible, and more stable monetary and financial system.

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy and financial regulation.

GDP

Gross Domestic Product, the total value of all final goods and services produced within a country in a given period of time.

Tax Cuts

A reduction in the amount of taxes imposed by a government on individuals or businesses.