An increase in aggregate demand is most likely to cause an increase in the price level when the economy is
a. operating near full employment.
b. on the horizontal part of the aggregate supply curve.
c. operating with high unemployment.
d. operating with substantial excess capacity.
a
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In the United States, the idea that the federal government should undertake actions to stabilize business activity
A) was established in the Declaration of Independence. B) is a relatively new idea that developed in the years during and after the Great Depression. C) has been around since the early 1700s. D) developed during World War I.
Which of the following is a positive statement?
a. An unemployment rate of 7 percent or higher is a national disgrace. b. Unemployment is a less important problem than inflation. c. When the national unemployment rate is 7 percent, the unemployment rate for inner-city youth is often close to 40 percent. d. Unemployment and inflation are equally important problems. e. An inflation rate of 7 percent is too high.