-In the Above Figure the Economy Is Initially at Point

question 287

Multiple Choice

-In the above figure the economy is initially at point A on the aggregate expenditure curve AE₀. Suppose firms expect profits to increase and decide to increase investment. As a result

• A) the AE curve shifts upward to a curve such as AE₂.
• B) the AE curve shifts downward to a curve such as AE₁.
• C) there is a movement along AE₀ to a point such as B.
• D) there is a movement along AE₀ to a point such as C.

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Definitions:

Independent Variable

In an experiment, the variable that the experimenter manipulates to examine its impact on the dependent variable.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Humanistic Psychology

A school of thought that investigates how people grow to become happier and more fulfilled; it focuses on the basic goodness of people.

Behaviorism

A branch of psychology that focuses on observable behaviors rather than on internal events like thinking and emotion, emphasizing the effects of environment on behavior.