Suppose That in a New Classical Model the Public Anticipates

question 143

Multiple Choice

Suppose that in a new classical model the public anticipates that policymakers will increase aggregate demand.However,aggregate demand increases by less than what the public anticipated.The result in the short run is that Real GDP ____________ and the price level ____________.

• A) decreases; decreases
• B) increases; increases
• C) increases; decreases
• D) decreases; increases

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Definitions:

Maslow Hierarchy

A psychological theory proposing a five-tier model of human needs, from basic (physiological) to more complex (self-actualization) needs.

Social

Pertains to the interactions and relationships among individuals in a society and the structure and norms that guide these interactions.

Self-actualization

A concept in psychology, often associated with Maslow's hierarchy of needs, representing the realization of one's potential and the fulfillment of personal talents and capabilities.

Personal

Relating to or affecting a particular person rather than anyone else; individual or private.