In November, 2012, U

question 274

Multiple Choice

In November, 2012, U.S. lawmakers were faced with a "fiscal cliff:" if they did not agree on how to reduce the federal deficit, automatic tax increases and drastic cuts in government spending would take effect. What would happen if the fiscal cliff occurred?

• A) The aggregate demand curve shifts leftward, the price level falls and real GDP decreases.
• B) The aggregate demand curve shifts rightward, the price level rises and real GDP increases.
• C) The short run aggregate supply curve shift leftward, the price level rises and real GDP decreases.
• D) The short run aggregate supply curve shifts rightward, the price level falls and real GDP increases.

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Definitions:

Primacy Effect

The tendency to remember information at the beginning of a list better than information in the middle or at the end.

First Impressions

The initial thoughts or judgments formed about someone or something upon meeting or encountering them for the first time, often determining subsequent interactions.

Recency Effect

The tendency to remember the most recently presented information better than information presented earlier.

Attribution Theory

A concept in social psychology focused on how individuals interpret events and how this relates to their thinking and behavior, specifically how they attribute causes to successes and failures.