2.2.1 - Income and Employment
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Practice Questions
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What does aggregate demand consist of?
💡 Hint: Think about the components that influence total demand.
What is the effect of an increase in government spending?
💡 Hint: Consider how government projects create jobs and income.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is aggregate demand?
💡 Hint: Think about the different ways people and businesses demand goods.
True or False: Unemployment can only be frictional.
💡 Hint: Recall the different employment classifications discussed.
2 more questions available
Challenge Problems
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Calculate the effect of a government spending increase of $500 million on aggregate demand if the marginal propensity to consume (MPC) is 0.8.
💡 Hint: Use the multiplier effect to find the total increase in aggregate demand.
Discuss how a significant rise in interest rates might lead to higher unemployment levels in an economy.
💡 Hint: Consider the relationship between interest rates, consumer behavior, and business investment.
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