Under Which of the Following Circumstances Would We Observe the Greatest

question 194

Multiple Choice

Under which of the following circumstances would we observe the greatest increase in real income?

• A) Nominal income falls by 2 percent, and the price level falls by 10 percent.
• B) Nominal income rises by 8 percent, and the price level rises by 4 percent.
• C) Nominal income rises by 15 percent, and the price level rises by 12 percent.
• D) Nominal income falls by 4 percent, and the price level rises by 6 percent.

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Definitions:

Other-Race Effect

The cognitive bias to more easily recognize faces of the race that one is most familiar with, which can contribute to difficulties in cross-racial identification.

Scapegoat Theory

A psychological concept where individuals or groups are unfairly blamed for problems or wrongdoings not of their making.

Government Bureaucrats

Individuals employed within government agencies or departments, responsible for the implementation and management of policy and regulations.

Just-World Phenomenon

The cognitive bias to believe that the world is fundamentally fair, leading individuals to rationalize an otherwise inexplicable injustice as deserved by the victim.