Other Things Equal, an Increase in Aggregate Supply Will Cause

question 6

Multiple Choice

Other things equal, an increase in aggregate supply will cause:

• A)a decrease in equilibrium real GDP and a decrease in the equilibrium price level.
• B)an economic contraction.
• C)an increase in equilibrium real GDP and an increase in the equilibrium price level.
• D)cost-push inflation.
• E)a reduction in unemployment and a decline in inflation.

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Definitions:

Extinction

In the field of psychology, the slow reduction and eventual vanishing of a learned response when the previously associated conditioned stimulus is not presented together with the unconditioned stimulus anymore.

Classical Conditioning

An associative learning framework in which a response initially evoked by a second stimulus becomes elicited by the first stimulus alone due to repeated pairings of the stimuli.

Spontaneous Recovery

The reappearance of a previously extinguished response after a period of no exposure to the conditioned stimulus.

Insight Learning

A type of learning characterized by a sudden realization of a problem's solution.