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Macroeconomics

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Recession of 2007

MACRO-MRGVHY

Prior to the recession of 2007, during the 2003-2006 period, which response best describes aggregate economic performance in the United States?

A

Aggregate demand and aggregate supply were both increasing with an increasing real GDP and moderate price inflation.

B

Unemployment was perilously high in the 2003-2006 period. Expansionary fiscal policy was being explicitly used.

C

The country was battling very high inflation with very restrictive monetary policy that increased sharply the unemployment rate.

D

The country was suffering from a collapse of aggregate demand which lowered real GDP and threatened deflation.