The Adverse Impact of a Negative Aggregate Demand Shock Is

question 20

Multiple Choice

The adverse impact of a negative aggregate demand shock is reduced when the government does not target the deficit because

• A) targeting the deficit causes further negative aggregate demand shocks.
• B) negative aggregate demand shocks do not affect the deficit.
• C) the economy is always producing potential output.
• D) not targeting the deficit causes positive aggregate demand shocks.

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Definitions:

Lower Income Strata

A demographic group that earns significantly less income than the average, often facing economic challenges and reduced access to resources.

Trivial Matters

Issues or subjects that are of little importance or significance.

Stalking

Persistent and unwanted attention by one individual towards another, leading to fear or distress.

Counteract

To act against something to reduce its force or neutralize its effects.