When Expectations Are Rational

question 32

Multiple Choice

When expectations are rational,

• A)a foreseen expansionary policy action does not alter output.
• B)there cannot be any inflation.
• C)a foreseen expansionary policy action changes output.
• D)there is zero unemployment.

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Definitions:

Relaxation

A state of being free from tension and anxiety, which can be achieved through various techniques such as meditation or deep-breathing exercises.

Negative Reinforcement

A process in behavioral psychology where the removal or avoidance of an unpleasant stimulus strengthens a behavior or makes it more likely to occur.

Punishment

A consequence that reduces the likelihood of a behavior being repeated, usually by introducing an unpleasant response or removing a desirable outcome following an undesirable behavior.

Positive Reinforcement

A technique in behavior modification that involves the introduction of a desirable stimulus after a behavior to increase the likelihood of that behavior being repeated.