please answer this correctly, this is for my exam!

Economics
Tutor: None Selected Time limit: 1 Day

When aggregate demand is stimulated during a very deep recession, the most likely result is for

a. the rate of unemployment to rise.

b. the full multiplier effect to occur.

c. reduction in the foreign trade deficit.

d. an immediate increase in the price level.

e. output to remain fixed.

Aug 19th, 2015

Thank you for the opportunity to help you with your question!

Answer D. An immediate increase in price level

Explanation:

Foreign trade deficit result from high investments and budget deficits. Increase in multiplier effect occurs as a result of increased expenditure, and the output is influenced by depreciation. The rate of unemployment is a long-term effect.

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Aug 19th, 2015

why do you think b is not the answer?

Aug 19th, 2015

why do you think b is not the answer?

Aug 19th, 2015

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