In the Short Run, an Increase in the Money Supply

question 114

Multiple Choice

In the short run, an increase in the money supply is likely to lead to

• A)lower unemployment and lower inflation.
• B)lower unemployment and higher inflation.
• C)higher unemployment and lower inflation.
• D)higher unemployment and higher inflation.

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Definitions:

Sensitization

The process of becoming more sensitive to a stimulus after exposure; it leads to an amplified response to a preexisting stimulus.

Habituation

The process by which an organism decreases or ceases its responses to a repetitive or prolonged stimulus, indicating a basic form of learning.

Behavioral Contrast

occurs when a change in the conditions of reinforcement for one behavior leads to a change in the rate of responding for another behavior.

Disinhibition

The process by which a suppressed behavior is re-expressed following the removal or reduction of inhibition or restraint.