Define and Give an Example of (1) Primacy Effect

question 36

Essay

Define and give an example of (1) primacy effect. (2) fundamental attribution error, and (3) self-serving bias.

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Definitions:

Monetary Neutrality

The concept that changes in the money supply only affect nominal variables in the economy (such as prices, wages, and exchange rates) in the long term, without affecting real variables (like employment and real GDP).

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust to new conditions or markets.

Quantity Theory

An economic theory that suggests the general price level of goods and services is directly proportional to the amount of money in circulation.

Money Supply

The total economic resources available in an economy at a certain period, including cash, coins, and the money in checking and savings accounts.