17. () Suppose policymakers take actions that cause a contraction of aggregate demand. Which of the following is ashort-run consequence of this contraction?A The inflation rate decreases.BCDThe level of output decreases.The unemployment rate increases.All of the above are correct.

Meaning of contraction of demand: When the quantity demanded decreases due to a increase in the…

17. () Suppose policymakers take actions that cause a contraction of aggregate demand. Which of the following is a short-run consequence of this contraction? A B C D The inflation rate decreases. The level of output decreases. The unemployment rate increases. All of the above are correct.

17. () Suppose policymakers take actions that cause a contraction of aggregate demand. Which of the following is a short-run consequence of this contraction? A B C D The inflation rate decreases. The level of output decreases. The unemployment rate increases. All of the above are correct.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter25: The Keynesian Perspective

Section: Chapter Questions

Problem 20CTQ: Suppose the economy is operating at potential GDP when It experiences an increase in export demand....

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Question

17. () Suppose policymakers take actions that cause a contraction of aggregate demand. Which of the following is a
short-run consequence of this contraction?
A The inflation rate decreases.
B
C
D
The level of output decreases.
The unemployment rate increases.
All of the above are correct.

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