A reflationary (expansionist) policy:
a) Increases aggregate supply
b) Increases aggregate demand
c) Decreases the price level
d) Increases full employment
Answer: b) Increases aggregate demand
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In the long run, the level of output depends on the price level
Indicate whether the statement is true or false
Who benefits from rising inflation?
A) those who already have fixed-rate loans B) those considering taking out a loan C) lenders that already made loans D) lenders considering whether to make new loans
The demand curve for labor will shift whenever
A) the demand for the final product changes. B) the wage rate changes. C) the supply curve of labor shifts. D) the marginal factor cost changes.
In long-run equilibrium, every perfectly competitive firm
a. maximizes its output b. chooses its plant size and output level to operate at minimum long-run marginal cost c. chooses its plant size and output level to operate at minimum long-run average total cost d. earns an economic profit e. suffers an economic loss