The Decrease in Investment That Occurred as a Result of Pessimism

question 105

Multiple Choice

The decrease in investment that occurred as a result of pessimism about the health of the economy after the collapse of the housing bubble caused aggregate:

• A) demand to increase.
• B) demand to decrease.
• C) supply to increase.
• D) supply to decrease.

---

Definitions:

Self-fulfilling Prophecies

Predictions that directly or indirectly cause themselves to become true, due to positive feedback between belief and behavior.

Actor-observer Bias

A cognitive bias where individuals attribute their own actions to external factors, while they attribute others' actions to internal traits or characteristics.

Positive Stereotypes

Stereotypes that attribute positive attributes to a group, which, despite being favorable, can still have negative consequences and reduce individuality.

Kelley's Model

A psychological theory that suggests how individuals attribute causes to events based on consistency, distinctiveness, and consensus information.