Table 7-1 Table 7-1 Shows the Aggregate Demand and Short-Run

question 21

Multiple Choice

Table 7-1
Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. If policymakers choose to close the gap by using stabilization policy, they should use

• A) contractionary fiscal or monetary policies.
• B) expansionary fiscal or monetary policies.
• C) a combination of contractionary fiscal and expansionary monetary policies.
• D) a combination of expansionary fiscal and contractionary monetary policies.

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Definitions:

Functional Fixedness

A mindset that limits an individual's use of an object to its conventional purpose alone, inhibiting their capacity for innovation and solving challenges.

Functional Fixedness

A cognitive bias that limits a person's ability to use an object only in the way it is traditionally used, hindering problem-solving.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering the ability to see alternative uses or solutions.

Insight

The capacity to gain an accurate and deep understanding of a person or situation.