Figure 11-1 -Refer to Figure 11-1. If the Fed Wants to Achieve

question 1

Multiple Choice

Figure 11-1
-Refer to Figure 11-1. If the Fed wants to achieve the results shown in Panel (b) , it should

• A) lower the discount rate.
• B) decrease margin requirements.
• C) decrease reserve requirements.
• D) sell government bonds in the open market.

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Definitions:

Extinction

In behavioral psychology, the process by which a conditioned response decreases in frequency and eventually disappears after the conditioned stimulus is repeatedly presented without the unconditioned stimulus.

Conditioned Response

A learned response to a previously neutral stimulus that becomes associated with a significant stimulus.

Conditioned Stimulus

A stimulus that has been associated with a particular response through conditioning, leading to its ability to elicit that response on its own.

Meat Powder

An example of a stimulus used in classical conditioning experiments, famously by Ivan Pavlov.