Based on the graph showing an expansionary policy response to a negative supply shock, an increase in aggregate demand has the negative consequence of ______.
a. decreasing price levels
b. increasing unemployment
c. increasing inflation
d. decreasing output
c. increasing inflation
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When it comes to unlikely but potentially deadly events, individuals
A) are very good at estimating risks. B) are not very good at estimating risks. C) are better than large corporations at estimating risks. D) do not even attempt to estimate risks.
In deciding whether to operate in the short run, the firm must consider the relationship between price and
A) total cost. B) average variable cost. C) total fixed cost. D) the number of buyers.
In the intermediate range of the aggregate supply curve, if government spending increases caused the aggregate demand curve to shift outwards, which of the following ismostlikely to occur?
a. The price level and real GDP will both rise. b. The price level will not change, but real GDP will increase. c. The price level will rise, but real GDP will not change. d. Both the price level and real GDP will not change.
At a consumer's optimal choice, the consumer chooses the combination of goods that equates the marginal rate of substitution and the price ratio
a. True b. False Indicate whether the statement is true or false