If a Social Preference for Low Inflation Is Strong, Then

question 33

Multiple Choice

If a social preference for low inflation is strong, then the optimal policy response to oil shocks might be reducing ____ to keep the price level _____.

• A) AD, constant
• B) AD, increasing
• C) SRAS, constant
• D) SRAS, increasing
• E) none of the above

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Definitions:

Information-processing Approach

A model in psychology that describes cognition as the processing of information through a system that works similarly to a computer.

Computer

An electronic device capable of processing, storing, and displaying information for various tasks.

Sensory Impressions

Information gathered by the senses (sight, smell, touch, taste, and hearing) that shapes our understanding of the environment.

Bioecological Perspective

A theory in developmental psychology that emphasizes the importance of the interactions between individuals and their environments, including biological, social, and cultural factors.