Use the Figure Below to Answer the Following Question

question 76

Multiple Choice

Use the figure below to answer the following question.
Figure 15-5

-Refer to Figure 15-5.If the economy were currently operating at point A in the exhibit and expansionary policy were enacted that would shift AD₁ to AD₂,

• A)if people have adaptive expectations,the economy would move to point B in the short run.
• B)if people have rational expectations,the economy would move to point C in the short run.
• C)in the long run,the economy would move to point C regardless of how expectations are formed.
• D)all of the above are true.

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Definitions:

Ringelmann Effect

The phenomenon where individual productivity decreases as the size of a group increases, often due to coordination and motivation issues.

Anonymity

The state of being anonymous, where an individual's identity is not known or revealed.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on simple tasks and performing poorly on complex tasks.

Audiences Facilitate

The phenomenon where the presence of an audience improves the performance of certain tasks by individuals, also known as the social facilitation effect.