Economist Brown Believes That Changes in Aggregate Demand Affect Only

question 157

Multiple Choice

Economist Brown believes that changes in aggregate demand affect only the price level,and economist Black believes that changes in aggregate demand affect only Real GDP.What does the aggregate supply (AS) curve look like for each economist?

• A) For economist Brown the AS curve is vertical and for economist Black the AS curve is horizontal.
• B) For economist Brown the AS curve is horizontal and for economist Black the AS curve is vertical.
• C) For economist Brown the AS curve is upward sloping and for economist Black the AS curve is downward sloping.
• D) For economist Brown the AS curve is downward sloping and for economist Black the AS curve is upward sloping.

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Definitions:

Regulatory Fit

Regulatory Fit is a theory that suggests people's motivation in a task, decision, or persuasion is enhanced when the approach matches their regulatory focus, either promotion or prevention focused.

Met Needs

Refers to needs that have been satisfied, usually pertaining to the basic physical or psychological desires of an individual.

Incentive

A stimulus or reward that motivates or encourages an individual to perform an action or exhibit a specific behavior.

Drive Reduction

A motivational theory that posits that people are motivated to take actions that reduce psychological needs and maintain homeostasis.