Practice Questions
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How does an increase in aggregate demand generally affect the unemployment rate in the short run?
When people want to buy more goods and services, businesses need to hire more workers. Other options are incorrect because Some might think that more ...
How can monetary policy tools, such as interest rate adjustments, impact aggregate demand and subsequently influence unemployment levels?
Lowering interest rates makes loans cheaper. Other options are incorrect because Raising interest rates can make borrowing expensive; Keeping interest...
How does a decrease in aggregate demand typically affect unemployment rates in an economy, and what role does monetary policy play in this relationship?
When people buy less, businesses make less money. Other options are incorrect because This option suggests that raising interest rates helps reduce un...
How does monetary policy affect aggregate demand during an economic recession, particularly in relation to achieving full employment?
Lowering interest rates makes loans cheaper. Other options are incorrect because Some might think raising interest rates helps the economy; People may...
How does an increase in aggregate demand potentially affect the unemployment rate in a demand-pull inflation scenario?
When demand goes up, businesses need more workers to make more products. Other options are incorrect because Some might think that higher prices alway...
What is the relationship between aggregate demand and unemployment in an economy?
When people want to buy more goods and services, businesses need to hire more workers. Other options are incorrect because This idea suggests that whe...
What is the relationship between aggregate demand and unemployment in an economy?
When people want to buy more goods and services, businesses need to hire more workers. Other options are incorrect because This idea suggests that whe...
Which type of unemployment arises when individuals are temporarily out of work while transitioning between jobs?
Frictional unemployment happens when people are between jobs. Other options are incorrect because This type happens when jobs disappear because of cha...
When net exports increase, it leads to an increase in __________, which can help reduce cyclical unemployment.
When net exports go up, it means more goods are sold to other countries. Other options are incorrect because Some might think that higher exports affe...
If a country experiences an increase in net exports, which of the following is the most likely impact on aggregate demand and unemployment?
When a country sells more goods to other countries, it earns more money. Other options are incorrect because Some might think that if demand goes down...
If a country experiences an increase in foreign demand for its exports, how would this situation primarily affect its aggregate demand and unemployment levels? Classify the outcome into one of the following categories: A) Increased aggregate demand leading to decreased unemployment, B) Decreased aggregate demand leading to increased unemployment, C) No effect on aggregate demand or unemployment, D) Increased aggregate demand with no effect on unemployment.
When more people in other countries want to buy a country's goods, it means that country is selling more. Other options are incorrect because This opt...
In Flowerland, a sudden increase in foreign demand for its agricultural products leads to a significant rise in net exports. How would this change likely affect the overall economy of Flowerland, particularly in relation to aggregate demand and unemployment levels?
When more products are sold to other countries, Flowerland earns more money. Other options are incorrect because This answer suggests that selling mor...
If a country experiences a significant increase in net exports, what is the most likely underlying effect on its unemployment rate?
When a country sells more goods to other countries, it creates more jobs at home. Other options are incorrect because Some might think that selling mo...
Which of the following factors can lead to an increase in aggregate demand, thereby potentially reducing cyclical unemployment? Select all that apply.
None of the choices listed will actually increase aggregate demand. Other options are incorrect because People might think that more spending by consu...
Arrange the following steps in the correct sequence to illustrate how increased net exports influence aggregate demand and reduce cyclical unemployment: A) Increased net exports lead to higher aggregate demand, B) Higher aggregate demand stimulates production, C) Increased production requires more labor, D) More labor reduces cyclical unemployment.
When net exports go up, it means we sell more goods to other countries. Other options are incorrect because This option suggests that higher demand co...
If an increase in consumer spending (A) leads to a rise in aggregate demand (B), then an increase in net exports (C) should lead to what outcome in the economy (?)
When net exports go up, it means more goods are sold to other countries. Other options are incorrect because Some might think that more demand directl...
How does an increase in net exports affect aggregate demand and unemployment?
When net exports go up, it means we sell more goods to other countries. Other options are incorrect because This answer suggests that higher net expor...
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