Difficulty: Medium Figure 13-4

question 63

Multiple Choice

Difficulty: Medium Figure 13-4
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption,
I_P = Planned Investment. Suppose AE = C + I_P, and I_P is autonomous. If the level of real GDP equals $7,000 billion, and if there are no changes in the consumption function or in planned investment, then we expect that, in the next period, real GDP will

• A) rise.
• B) remain unchanged.
• C) fall.
• D) fall, but only if there is an offsetting change in autonomous consumption.

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Definitions:

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, values, or ideas simultaneously.

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The idea that individuals determine their own social and personal worth based on how they stack up against others.

Different Groups

Diverse categories or clusters of individuals distinguished by shared characteristics, interests, or purposes.

Our Performance

A reference to how well an individual or group completes tasks or achieves goals in a given context.