If Society Wants Aggregate Demand to Increase Without Changes in the Price

question 65

Multiple Choice

If society wants aggregate demand to increase without changes in the price level, then there must be

• A) a gap between full employment and the current level of real GDP and an increase in autonomous spending.
• B) an increase in autonomous spending combined with an increase in the marginal propensity to save.
• C) an increase in autonomous saving so that autonomous investment spending can increase.
• D) an increase in autonomous spending and a horizontal short-run aggregate supply curve.

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Definitions:

Group Think

The behavior seen in groups when the urge for peace or uniformity brings about decisions that are improper or not functional.

Critical Evaluation

The process of examining an issue or object critically to form an opinion or judgment after considering its strengths and weaknesses.

Strong Leader

A person who exhibits confidence, integrity, and a clear vision, and who possesses the ability to inspire and motivate others.

Irving Janis

A psychologist known for his theory of "groupthink," which describes the faulty decision-making process in cohesive groups.