The Wealth Effect of an Increase in the Price Level

question 309

Multiple Choice

The wealth effect of an increase in the price level results from a

• A) change in the price of current goods relative to future goods.
• B) change in the price of foreign goods relative to domestic goods.
• C) change in the purchasing power of wealth.
• D) Both answers B and C are correct.

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Definitions:

Unconditioned Stimulus

In behavioral psychology, a stimulus that naturally and automatically triggers a response without any previous conditioning.

Negative Reinforcement

is a concept in behavioral psychology where the removal of a negative condition strengthens a behavior.

Operant

Pertaining to operant conditioning, a method of learning that employs rewards and punishments for behavior, leading to changes in that behavior's frequency.

Systematic Desensitization

A therapeutic intervention aimed at reducing an individual's anxiety responses through gradual exposure to the feared object or situation, along with relaxation techniques.