Active fiScal and Monetary Policy Is Required to Move an Economy

question 9

Multiple Choice

Active fiscal and monetary policy is required to move an economy back to equilibrium when:

• A) the pace of adjustment of prices and wages is sluggish.
• B) wages and prices are highly flexible.
• C) the long-run aggregate supply curve is upward sloping.
• D) the aggregate demand curve is vertical.

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Definitions:

Spontaneous Recovery

The return of a conditioned response that had been previously eliminated, following a timeframe where there was no contact with the conditioned stimulus.

CS-US Trials

In conditioning, trials where a conditioned stimulus (CS) is presented before an unconditioned stimulus (US) to create an association.

Extinction

In behavioral psychology, the process by which a conditioned response decreases in frequency and eventually disappears.

Second-order Conditioning

A conditioning process where a neutral stimulus becomes a conditioned stimulus through association with an already conditioned stimulus.