If the Aggregate Supply Curve Shifts Outward, Then Unemployment

question 16

Multiple Choice

If the aggregate supply curve shifts outward, then unemployment

• A)and inflation will both decrease.
• B)and inflation will both increase.
• C)will increase and inflation will decrease.
• D)will decrease and inflation will increase.

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Definitions:

Availability Heuristic

A cognitive bias where people overestimate the importance or frequency of information that is readily available to them.

Anchoring and Adjustment Heuristic

A mental shortcut that influences the way people intuitively assess probabilities and make decisions based on initial information.

Escalation of Commitment

The phenomenon of investing increasingly more resources into a failing course of action due to cognitive biases and sunk costs.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.