Contractionary Monetary Policy Causes

question 80

Multiple Choice

Contractionary monetary policy causes

• A)aggregate demand to rise and the price level to rise.
• B)aggregate demand to fall and the price level to fall.
• C)aggregate demand to rise and the price level to fall.
• D)aggregate demand to fall and the price level to rise.

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, often utilized when facing complex problems or incomplete information.

Reasoning

The mental activity of transforming information to reach conclusions.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Endowment Effect

The cognitive bias causing individuals to ascribe higher value to things merely because they own them.