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A Reduction in the Interest Rate Causes Consumption and Investment

question 68

Multiple Choice

A reduction in the interest rate causes consumption and investment to _____, which shifts the aggregate demand curve _____.


Definitions:

Cognitive Misers

A theory suggesting individuals prefer to minimize mental effort in decision making and problem solving, relying on heuristics and shortcuts.

Observing Behavior

The act of watching or noting the actions of individuals or groups for the purpose of analysis or study.

Attribution Theory

The view that people act as intuitive scientists when they observe other people’s behavior and infer explanations about why those people acted the way they did.

Intuitive Scientists

A theory suggesting that people often act like amateur scientists, attempting to understand and predict other people's behavior by forming hypotheses and making deductions.

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