Use the Following to Answer Questions

question 24

Multiple Choice

Use the following to answer questions:
-(Figure 7-1: Circular-Flow Model) Use Figure 7-1: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is an increase in government spending, holding everything else constant, which outcome is likely to occur?

• A) an increase in the nominal GDP
• B) a decrease in the real GDP
• C) an increase in the unemployment rate
• D) a decrease in the inflation rate

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Definitions:

Availability Bias

A cognitive bias that causes people to overestimate the likelihood of events based on their availability in memory, often leading to skewed decision-making.

Belief Perseverance

The tendency to cling to one's initial belief even after receiving new information that contradicts or disconfirms the basis of that belief.

Confirmation Bias

A predisposition to identify, comprehend, prioritize, and recollect facts in ways that corroborate one’s existing beliefs or suppositions.

Overconfidence Bias

The tendency for an individual to overestimate their abilities, knowledge, or performance capabilities.