Suppose there was an unexpected increase in aggregate demand. We would expect to observe
A. a decrease in aggregate demand.
B. frictional unemployment to increase.
C. the duration of unemployment and the amount of unemployment to decrease.
D. higher wages, with the duration of unemployment and the amount of unemployment unchanged.
Answer: C
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A) states that the quantity of money multiplied by velocity must equal nominal income in a given year B) describes a relationship that is true by definition C) shows that real GDP must equal real money balances times the number of times a dollar turns over in a year D) all of the above E) none of the above
What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?