Increases in aggregate demand are likely to create

a) deflation during recessions
b) inflation when the output gap is quite negative
c) higher output when the output gap is negative, and inflation when output is at capacity
d) reductions in output if the output gap is already positive
e) both inflation and recession

c) higher output when the output gap is negative, and inflation when output is at capacity

Economics

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a. true b. false

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Indicate whether the statement is true or false

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