(Figure: Shifts in Aggregate Demand) Starting at Equilibrium Point B

question 121

Multiple Choice

(Figure: Shifts in Aggregate Demand) Starting at equilibrium point b, if investment or exports increase, the demand curve will shift to _____, thus _____ the price level and _____ real output.

• A) AD₁; increasing; decreasing
• B) AD₂; decreasing; decreasing
• C) AD₁; increasing; increasing
• D) AD₂; increasing; decreasing

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Definitions:

State-dependent Memory

The phenomenon where information learned in a particular state of mind (e.g., emotional, psychological, or physical) is more easily recalled when in the same state.

Associative Memory

The ability to learn and remember the relationship between unrelated items.

Déjà Vu

That eerie sense that “I’ve experienced this before.” Cues from the current situation may subconsciously trigger retrieval of an earlier experience.

State-dependent Memory

The phenomenon where information learned in a specific psychological or emotional state is more easily recalled when in the same state.