Figure 27-2 -Refer to Figure 27-2.In the Dynamic Model of AD-AS in Model

question 28

Multiple Choice

Figure 27-2

-Refer to Figure 27-2.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely

• A) decrease government spending.
• B) increase government spending.
• C) increase oil prices.
• D) increase taxes.
• E) lower interest rates.

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Definitions:

Availability Heuristic

This is a mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.

Representativeness Bias

A cognitive bias where individuals judge the probability of an event by how much it resembles their existing stereotypes or expectations, rather than based on actual statistical evidence.

Self-fulfilling Prophecy

A belief or expectation that an individual holds that comes true because he or she acts in ways that support or lead to its fulfilment.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.