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If the Economy Is Operating Way Below Capacity, an Increase

question 97

Multiple Choice

If the economy is operating way below capacity, an increase in aggregate demand causes a ________ change in the price level and ________ change in output.


Definitions:

Long Run Deficit

A fiscal situation where a government consistently spends more than it earns over an extended period, leading to sustained budget deficits.

Nominal Wages

The wages that are paid to employees without adjustment for inflation, representing the dollar amount of the pay before considering purchasing power.

Real Incomes

The purchasing power of an individual's or group's income, considering the effects of inflation on buying power.

Life Shortening Diseases

Conditions or illnesses that have the potential to reduce the lifespan of an individual.

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