The International Substitution Effect Exists Because a

question 115

Multiple Choice

The international substitution effect exists because a

• A) higher price level will reduce interest rates and stimulate foreign investment.
• B) lower price level will make domestically produced goods less expensive relative to foreign goods.
• C) higher price level will reduce the purchasing power of money.
• D) lower price level will encourage Americans to import more foreign goods.

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Definitions:

Extinction

In psychology, extinction is the process by which a conditioned response decreases or disappears after repeated presentations without the unconditioned stimulus.

Positive Reinforcer

A stimulus that increases the probability of a behavior being repeated by providing a rewarding outcome.

Punishment

A consequence that follows an undesirable behavior, with the intent of reducing or eliminating that behavior.

Reinforcers

Stimuli, events, or conditions that increase the likelihood of a behavior being repeated.