Consider the Basic AD/AS Model, and Suppose There Is a Negative

question 94

Multiple Choice

Consider the basic AD/AS model, and suppose there is a negative output gap. If an expansionary fiscal policy is pursued and the AS curve shifts right unexpectedly, the fiscal policy may be , and real GDP may _ _ potential GDP.

• A)too strong; rise above
• B)too weak; stay below
• C)too weak; rise above
• D)appropriate; equal
• E)too strong; stay below

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Definitions:

Self-Serving Bias

The common human tendency to attribute success to personal characteristics and failures to external factors, thereby protecting self-esteem.

Defensive Attribution

A cognitive bias where individuals attribute causes of accidents or misfortunes to external factors when involving others but to internal factors when it involves themselves, often to shield their ego.

Fundamental Attribution Bias

The tendency to overemphasize personality-based explanations for behaviors observed in others while underemphasizing the role of external factors.

Self-Effacing Bias

A tendency to downplay one's own successes or positive traits, often attributing them to external factors.