A Change in Any Component of Aggregate Demand Creates a Larger

question 47

Multiple Choice

A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the ________ effect, and it means , for example, that a ________ in consumption will cause an even larger ________ in AD.

• A)multiplier; increase; decrease
• B)liquidity; decrease; decrease
• C)growth; increase; decrease
• D)multiplier; decrease; decrease
• E)liquidity; increase; decrease

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Definitions:

Kelley's Covariation Model

This model proposes that people attribute behavior to factors that covary most closely with, or appear to cause, that behavior, considering consensus, distinctiveness, and consistency information.

Consensus

A general agreement among a group of people or within a community, often reached after discussion and consideration of various perspectives.

Distinctiveness

the quality or condition of being clearly different or unique, setting someone or something apart from others.

Kelley's Covariation Model

A psychological theory that explains how individuals attribute cause to events based on the consistency, distinctiveness, and consensus of the event.