Which of the Following Best Depicts the Short-Run Effect of a Price

question 59

Multiple Choice

Which of the following best depicts the short-run effect of a price shock due to a large increase in oil prices?

• A)The IA line shifts up, causing interest rates to rise, which causes the AD curve to shift to the right.
• B)The IA line shifts up, causing interest rates to rise, which causes a leftward movement along the AD curve.
• C)The AD curve shifts to the left, causing interest rates to rise, which causes the IA line to shift down.
• D)The IA line shifts down, causing interest rates to rise, which causes a leftward movement along the AD curve.
• E)The IA line shifts up, causing interest rates to rise, which causes the AD curve to shift to the left.

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Definitions:

Events

Occurrences or happenings that are significant in some way to the environment or individuals.

Mood-congruent Memory

The tendency to recall experiences that are consistent with one's current mood.

State-dependent Memory

The phenomenon where information learned in a particular state of mind is more easily recalled when in that same state.

Encoding Strategies

Techniques used to process and store information in memory more effectively.