Consider the Following News Headline: "Business Community Gloomy About the Economy-Investment

question 1

Multiple Choice

Consider the following news headline: "Business community gloomy about the economy-investment plans axed." Assuming that aggregate output is demand-determined,what effect will this have,all other things equal,on the AE function and on equilibrium national income?

• A)The AE function will shift down parallel to itself,and equilibrium national income will fall.
• B)The AE function will rotate upward (become steeper),and equilibrium national income will rise.
• C)The AE function will rotate downward (become flatter),and national income will fall.
• D)The AE function will shift up parallel to itself,and equilibrium national income will rise.
• E)There will be no change in the AE function or in equilibrium national income.

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Definitions:

Insufficient Justification Effect

A phenomenon where individuals modify their attitudes or beliefs to align with their actions, especially when those actions lack adequate external justification.

Fundamental Attribution Error

The tendency to overemphasize internal characteristics for someone else's behavior and underemphasize situational factors.

Accessible Attitude

An attitude that is easily recalled from memory due to its relevance or frequency of activation.

Smoking

The act of inhaling and exhaling the smoke of burning tobacco in cigarettes, cigars, or pipes, often leading to addiction and health problems.