Suppose We Know the Following Information About a Hypothetical Economy

question 52

Multiple Choice

Suppose we know the following information about a hypothetical economy: - real GDP = $945 billion
- potential GDP = $900 billion
- inflation rate = 3%
If the central bank conducts monetary policy in an attempt to keep the unemployment rate below the NAIRU,the inflation rate is likely to

• A)cause stagflation.
• B)cause a recession.
• C)remain constant at 3%.
• D)fall below 3%.
• E)rise above 3%.

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Definitions:

Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, and preferences.

Experience

The knowledge or skill acquired through direct observation or participation in events or activities.

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is the act of copying the actions, attitudes, or mannerisms of another individual or group, often as a way to learn or fit in socially.

Shaping

A process in psychology where desired behavior is taught by reinforcing any steps that are closer to the target behavior.