Figure 12.4 Scenario: the Above Figures Represent the Economy of Mondolvia, Where

question 33

Multiple Choice

Figure 12.4

Scenario: The above figures represent the economy of Mondolvia, where points A, B, C, and D in the first figure reflect the corresponding points in the second figure. The economy of Mondolvia is initially at equilibrium with real GDP equal to potential GDP. In April 2012, Mondolvia reached the peak of a rapid housing bubble that dramatically increased consumer wealth. The central bank of Mondolvia recognized this housing bubble peak existed in June, 2012 and implemented corrective policy in August 2012. The corrective policy actually changed output in the economy 12 months after it was implemented. In the meantime, the housing bubble burst in December 2012, returning the economy back to its initial, pre-bubble equilibrium level.
-Refer to Figure 12.4.The increase in consumer wealth resulting from the housing bubble is best represented by a movement from

• A) point A to point B.
• B) point B to point D.
• C) point D to point C.
• D) point C to point A.

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Definitions:

Intentionally Inflicting

The deliberate act of causing harm or damage to someone or something.

Bystander Effect

An occurrence within social psychology where individuals become hesitant to help someone in distress if there are other witnesses present.

Assumed

Something that is taken for granted or accepted as true without proof or demonstration.

Diffusion Of Responsibility

The feeling among bystanders at an emergency that the responsibility for helping is shared by the group, making each person feel less compelled to act than if he or she alone bore the total responsibility.