The "Tech Bubble" Burst of 2000,the Terrorist Attacks of 2001

question 68

Multiple Choice

The "tech bubble" burst of 2000,the terrorist attacks of 2001 and the corporate scandals of 2001 and 2002 all had similar qualitative effects on the economy.Which of the following is an appropriate description of the mechanism that would have ensued?

• A)Household and business spending would have been eroded shifting the AD curve to the left.
• B)Unemployment would have risen and inflation would have fallen.
• C)Output would have declined below potential but through shifts in the AS curve,the self-correcting mechanism of the AD-AS framework would have brought the unemployment rate down to the lower levels we saw by 2004.
• D)all of the above
• E)none of the above

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Definitions:

Strawberries

A soft, red fruit with a sweet taste and small seeds on its surface, often eaten fresh or used in desserts.

Unemployment

A situation where individuals who are capable of working and willing to work cannot find employment.

Inefficiently Allocates

Describes a scenario where resources are not distributed or utilized in the most effective manner, leading to potential waste or misallocation.

Production Possibilities Frontier

A graph that shows the highest potential production levels for two or more products based on available resources.