An Exchange Rate Is Said to ____ When Its Short-Run

question 195

Multiple Choice

An exchange rate is said to ____ when its short-run response to a change in market fundamentals is greater than its long-run response.

• A) overshoot
• B) undershoot
• C) depreciate
• D) appreciate

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Definitions:

Extinction

In psychology, the gradual weakening and eventual disappearance of a conditioned response when the conditioned stimulus is presented without the unconditioned stimulus.

Classical Conditioning

A method where learning occurs by continuously associating two stimuli, making a response that was elicited by the second stimulus to be elicited by the first stimulus over time.

Conditioned Response

A response that is acquired after a previously neutral stimulus becomes linked with a stimulus that naturally induces a reaction.

Extinction

In behavior psychology, the gradual weakening and eventual disappearance of a conditioned response tendency.