Use the Following Graph to Answer the Next Seven Questions

question 22

Multiple Choice

Use the following graph to answer the next seven questions. The graph depicts an economy where aggregate demand and long-run aggregate supply (LRAS) have decreased, with no change in short-run aggregate supply (SRAS) .

-Which of the following would have caused aggregate demand to decrease in the graph,such as occurred during the Great Recession?

• A) an increase in expected income
• B) a decrease in tax rates
• C) a decrease in housing prices and stock prices
• D) an increase in consumer sentiment
• E) an advance in technology

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Definitions:

Central Mechanisms

Refers to the fundamental processes or systems in the central nervous system that underlie functions such as perception, movement, and thought.

Self-Efficacy

An individual's belief in their own ability to succeed in specific situations or accomplish a task.

Community Psychology

A field of psychology that has highlighted the need for the prevention of mental disorders and the promotion of mental health, as opposed to exclusive reliance on treatment approaches; applies an ecological perspective that stresses the interdependence of the individual, the family, community, and society; embodies sensitivity to a person’s social context and appreciation of diversity; pays more attention to people’s strengths and the promotion of wellness, in contrast to the clinical psychology focus on deficits and reduction of maladaptive behaviors; stresses the importance of informal social supports, rather than relying solely on professional help; and is oriented to social justice and social change.

Ecological Approach

A perspective within psychology and other social sciences that emphasizes the importance of understanding individuals in the context of their physical and social environments.