Suppose That the Money Multiplier Is 4

question 28

Multiple Choice

Suppose that the money multiplier is 4. If the monetary base decreases by $2 million, the quantity of money will

• A) increase by $8 million.
• B) increase by $500,000.
• C) decrease by $8 million.
• D) decrease by $500,000.

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Definitions:

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, emphasizing the effects of behavior on future behavior.

Negative Reinforcement

A process in behavioral psychology where the removal of an unpleasant stimulus strengthens a behavior.

Reciprocal Determinism

A concept in psychology positing that an individual's behavior is influenced by and influences their personal factors and the environment in a cyclical manner.

Vygotsky's Theory

A theory in psychology proposed by Lev Vygotsky, which emphasizes the fundamental role of social interaction in the development of cognition.