Figure 27-5 -Refer to Figure 27-5. in the Dynamic Model of AD-AS

question 60

Multiple Choice

Figure 27-5
-Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely

• A) decrease government spending.
• B) increase government spending.
• C) increase oil prices.
• D) increase taxes.
• E) lower interest rates.

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Definitions:

Self-Fulfilling Prophecies

Expectations about a situation or person that lead to behaviors which cause the expectation to come true.

Cognitive Dissonance

A psychological concept describing the discomfort felt when holding conflicting cognition, beliefs, or values, prompting individuals to seek consistency.

Festinger

Leon Festinger was a social psychologist known for the theory of cognitive dissonance, which describes the discomfort felt when holding conflicting beliefs or values.

Communicator

A person or device that conveys information or facilitates communication between parties.