The Propagation Mechanism

question 1

Multiple Choice

The propagation mechanism

• A)explains why shocks to the economy have long-lasting effects
• B)says that changes in money supply affect individual markets but have only limited effects on the economy since markets clear rapidly
• C)supports the notion that anticipated money supply changes have no real effect on output
• D)says that unemployment is a result of firms paying workers higher than market-clearing wages to get them to work harder
• E)none of the above

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Definitions:

Endogenous Depression

A form of depression that is believed to result from internal physiological factors rather than external events or circumstances.

Operant Conditioning

A learning process in psychology that involves modifying behavior through reinforcement and punishment after a response.

Conservation

Refers to the cognitive understanding that certain properties of objects, such as volume or mass, remain unchanged even when their forms or appearances change.

Object Permanence

The concept that entities remain present even when they are not observable, audible, or detectable by any sensory means.