If aggregate demand had grown faster than it did from 2009 to 2010, then the U.S.economy would have experienced
A)higher unemployment and higher inflation.
B)lower unemployment and lower inflation.
C)higher unemployment and lower inflation.
D)lower unemployment and higher inflation.

Question

Quizplus · Accepted Answer

If aggregate demand had grown faster, it would have stimulated economic growth, leading to lower unemployment. However, with the economy operating closer to its potential, there would be upward pressure on prices, resulting in higher inflation. Therefore, the best choice is D, lower unemployment and higher inflation.

If Aggregate Demand Had Grown Faster Than It Did from 2009