A Negative Shock in Aggregate Demand Will Likely Result in ________

question 44

Multiple Choice

A negative shock in aggregate demand will likely result in ________.

• A) no permanent change in output
• B) no permanent change in the equilibrium inflation rate if the central bank responds by lowering interest rates
• C) an increase in aggregate demand for any inflation rate, if the central bank responds by lowering interest rates
• D) all of the above
• E) none of the above

---

Definitions:

Recency Effect

The tendency to remember the most recently presented information best.

Grocery Items

Products and goods available for purchase in supermarkets and grocery stores, typically including food, beverages, and household necessities.

Encoding Specificity Principle

A principle in psychology which posits that memory is most effectively retrieved when the information available at the time of recall is similar to the information available at the time the memory was encoded.

Procedural Memory

relates to the type of long-term memory responsible for knowing how to perform different actions and skills, essentially memory of the process of doing things.