Because Decreases in Inflation Increase Planned Spending and Short-Run Equilibrium

question 138

Multiple Choice

Because decreases in inflation increase planned spending and short-run equilibrium output,the

• A) inflation adjustment (IA)line is downward-sloping.
• B) inflation adjustment (IA)line is upward-sloping.
• C) aggregate demand (ADI)curve is horizontal.
• D) aggregate demand (ADI)curve is downward-sloping.
• E) aggregate demand (ADI)curve is upward-sloping.

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Fundamental Attribution Error

The tendency to overestimate the effect of personality or disposition and underestimate the effect of the situation in explaining social behavior.

Self-Serving Bias

A common tendency for individuals to attribute their successes to internal factors while blaming external factors for their failures.

Indoctrination

The process of teaching a person or group to accept a set of beliefs uncritically.