Figure: AS/AD Behavior Reference: Ref 14-1 (Figure: AS/AD Behavior)

question 17

Multiple Choice

Figure: AS/AD Behavior Reference: Ref 14-1 (Figure: AS/AD Behavior) Assume that an economy begins initially at Point 1 in the figure. In the presence of expansionary fiscal policy and intertemporal substitution, the economy moves to point ____ in the short run.

• A) 1
• B) 2
• C) 3
• D) 4

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Definitions:

Stereotypes

Oversimplified generalized beliefs about a group of people that may not accurately represent the diversity within the group.

System I

A term often used to describe fast, automatic, intuitive forms of thinking, as opposed to slower, more rational deliberation.

System II

A term used in cognitive psychology to refer to the analytical, effortful, and slower mode of thinking, as opposed to the fast, automatic, intuitive thinking of System I.

Reasoning

The method of analyzing something through reasoning to arrive at a verdict or decision.