Which Effect Best Explains the Downward Slope of the Aggregate

question 152

Multiple Choice

Which effect best explains the downward slope of the aggregate demand curve?

• A)a multiplier effect
• B)an income effect
• C)a substitution effect
• D)an interest rate effect

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Definitions:

Reactance

A psychological response where individuals experience discomfort and react in opposition when they perceive their freedoms or choices are being restricted.

Attribution Steps

The processes involved in identifying the cause of an event, emphasizing the analysis of behavior to decide between personal or situational explanations.

Gilbert and Malone

Refers to psychologists Daniel Gilbert and Patrick Malone, known for their work on social psychology, specifically on cognitive biases and errors in attribution.

Mastery Oriented

Refers to an approach or mindset focused on understanding and mastering a skill or knowledge area, rather than merely performing well to receive external rewards.