An Increase in Aggregate Demand Is Most Likely to Cause

question 142

Multiple Choice

An increase in aggregate demand is most likely to cause an increase in the price level when the economy is

• A)operating near full employment.
• B)on the horizontal part of the aggregate supply curve.
• C)operating with high unemployment.
• D)operating with substantial excess capacity.

---

Definitions:

Derogation of Target Bias

A cognitive bias where an individual derogates a target to justify maltreatment or a negative attitude toward them.

Morality Bias

The tendency to make judgments or assumptions based on moral standards, which can lead to biased decision-making.

Social Discounting Bias

The tendency to devalue benefits or harms that happen to people who are socially or spatially distant from oneself.

Social Discounting Bias

The tendency to devalue benefits or resources when they are to be shared with larger numbers of people.