Asked by Tommy Clobes on Jun 10, 2024
Verified
Suppose Americans become pessimistic about the future of the economy and, as a result, reduce their current consumption expenditures. Which of the following would you expect to occur as a result of this change?
A) In the short run, unemployment will increase and inflation will fall.
B) In the short run, unemployment will increase and inflation will rise.
C) In the short run, unemployment will decrease and inflation will rise.
D) In the short run, unemployment will decrease and inflation will fall.
Consumption Expenditures
The total amount spent by consumers on goods and services for personal use, often considered a major component of gross domestic product (GDP).
Short Run
A period in economics where the quantities of some inputs or resources cannot be changed.
Unemployment
A situation where individuals who are capable of working and willing to work at prevailing wage rates cannot find employment.
- Comprehend the role of fiscal and monetary policy in affecting inflation, unemployment, and aggregate demand in the immediate term.
Verified Answer
Learning Objectives
- Comprehend the role of fiscal and monetary policy in affecting inflation, unemployment, and aggregate demand in the immediate term.
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