Use the Following to Answer Questions

question 112

Multiple Choice

Use the following to answer questions:
Figure: Economic Adjustments
-(Figure: Economic Adjustments) Refer to Figure: Economic Adjustments. Assume that the economy is at point c. The effect of an increase in the money supply is represented by a shift of the _____ curve to _____.

• A) SRAS₁; SRAS₂
• B) SRAS₂; SRAS₁
• C) AD₁; AD₂
• D) AD₂; AD₁

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Definitions:

Functional Fixedness

A bias in cognition that confines a person to employ an object exclusively in its customary use, obstructing the process of generating creative solutions.

Mental Sets

Mental sets refer to the tendency to approach situations in a certain way because that method worked in the past, potentially preventing us from seeing alternative solutions.

Effective Problem Solving

A process of defining a problem, generating solutions, and choosing the best course of action to address the issue at hand.

Law Of Small Numbers

A bias in which people infer patterns or make generalizations from a small sample size, which may lead to misleading conclusions.