Which of the Following Would Help Explain Why the Aggregate

question 103

Multiple Choice

Which of the following would help explain why the aggregate demand curve slopes downward?

• A)An unexpectedly low price level raises the real wage,which causes firms to hire fewer workers and produce a smaller quantity of goods and services.
• B)A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate,which stimulates spending on net exports.
• C)A higher price level increases real wealth,which stimulates spending on consumption.
• D)A lower price level reduces the interest rate,which encourages greater spending on investment goods.

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Definitions:

Fundamental Attribution Error

The fundamental attribution error is the tendency to attribute others' behaviors to their personality or disposition rather than to external factors.

Personal Factors

Characteristics or attributes of an individual that influence their behavior and actions, including age, education, income, and personality traits.

Situational Factors

External forces that influence individuals' behavior and decision-making in specific contexts or environments.

Outgroup Heterogeneity Effects

The tendency to perceive members of an outgroup as more similar to each other than members of one's ingroup, often leading to stereotypes.