The AD schedule becomes flatter if: fiscal policy is relaxed. interest rate decisions react a lot to inflation. monetary policy is relaxed. changes in interest rates have a small effect on aggregate demand.

The AD schedule becomes flatter if: fiscal policy is relaxed. interest rate decisions react a lot to inflation. monetary policy is relaxed. changes in interest rates have a small effect on aggregate demand.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter10: Aggregate Demand And Supply

Section10.A: The Self Correcting Aggregate Demand And Supply Model

Problem 14SQ

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Concept explainers

Unemployment and Cost of Unemployment

Unemployment is the state of being unemployed, even when an individual is actively seeking work opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed.

Question

The AD schedule becomes flatter if:

		fiscal policy is relaxed.
		interest rate decisions react a lot to inflation.
		monetary policy is relaxed.
		changes in interest rates have a small effect on aggregate demand.

Definition Definition Policy implemented by the central bank of a country (such as the Federal Reserve in the United States) to achieve certain macroeconomic objectives. Monetary policy is a supply-side macroeconomic policy that supervises the growth rate and money supply in the economy.

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