If the Fed Increases the Quantity of Reserves, the Federal

question 8

Multiple Choice

If the Fed increases the quantity of reserves, the federal funds rate ________ and the quantity of money ________.

• A) rises; increases
• B) rises; decreases
• C) falls; increases
• D) falls; decreases

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Definitions:

Conditioned Stimulus

An initially neutral trigger that, following its association with an unconditioned stimulus, ultimately elicits a conditioned reaction.

Unconditioned Stimulus

In behavioral psychology, an automatically triggering stimulus that leads to a natural response without the need for prior learning.

Spontaneous Recovery

A phenomenon in learning where a previously extinguished response re-emerges after a pause in exposure to the conditioning stimulus.

Learned Response

A behavior developed as the result of conditioning, where an individual learns to respond in a certain way to a specific stimulus.