Refer to the Graph Above

question 1

Multiple Choice

Refer to the graph above. Assume that the economy is in initial equilibrium where AD₁ intersects AS₁. If there is an anticipated increase in aggregate demand to AD₂, then according to the rational expectations economists, the path for adjustment runs from point:

• A) A to B to C
• B) A to D to C
• C) A directly to C
• D) A directly to B

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Definitions:

Working-Memory Capacity

Working-memory capacity is the amount of information that an individual can hold temporarily in a readily accessible state for cognitive tasks.

Executive Functioning

Cognitive processes that include planning, making decisions, implementing strategies, inhibiting inappropriate behaviors, and using working memory to process information.

Stroop Effect

demonstrates the cognitive interference where a delay in the reaction time of a task occurs due to a mismatch in stimuli; for example, the word "red" printed in blue ink.

Susceptibility

The likelihood or tendency to be influenced or harmed by a particular condition or phenomenon.