The Difference in Outcomes Occurring with a Credible Nominal Anchor

question 7

Multiple Choice

The difference in outcomes occurring with a credible nominal anchor and without one, given a negative aggregate demand shock is that ________.

• A) with the credible policy there is no shift in the aggregate supply curve
• B) there is no difference but credibility provides national security
• C) without credible policy, inflation will continue to spiral upwards
• D) with credible policy, the aggregate supply curve shifts back quickly

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Definitions:

Social Class

A system of dividing society into different levels based on economic, professional, or educational status.

Communication

The act or process of using words, sounds, signs, or behaviors to express or exchange information or to express ideas, thoughts, feelings, etc., to someone else.

Contact Hypothesis

A theory suggesting that under appropriate conditions interpersonal contact is one of the most effective ways to reduce prejudice between majority and minority group members.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often accompanied by prejudice against other groups.