If the Economy Experiences an Inflationary Gap, a Contractionary Monetary

question 20

Multiple Choice

If the economy experiences an inflationary gap, a contractionary monetary policy will _______ investment and _______ interest rates.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

Primary Reaction

In psychology, this refers to an infant's instinctive responses to stimuli, such as sucking or grasping.

Built-In Fear

An innate or instinctive fear response, often to specific stimuli, that is considered to be a survival mechanism passed down through evolution.

Autonomic Arousal

Autonomic arousal refers to the activation of the autonomic nervous system, affecting physiological states such as heart rate and sweating in response to stimuli.

Cognitive Interpretation

The process of making sense of perceptions, sensations, and experiences through mental processing, often involving assigning meaning and integrating new information with existing knowledge.