Which of the Following Will Be Most Likely to Dampen

question 26

Multiple Choice

Which of the following will be most likely to dampen the expansionary effects of an increase in government spending financed by borrowing?

• A) The budget deficit will cause business decision makers to become more optimistic.
• B) The increase in demand for loanable funds as the result of borrowing will cause interest rates to rise and private investment to fall.
• C) The increase in government spending will cause the money supply to expand, thereby causing an inflationary boom.
• D) The additional borrowing will cause the central bank to buy more bonds, which will reduce aggregate demand.

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Definitions:

Little Albert

A classic experiment in psychology conducted by John B. Watson and Rosalie Rayner demonstrating how emotional responses can be conditioned in humans.

UCS

An abbreviation commonly used in psychology for "Unconditioned Stimulus," which is a stimulus that naturally triggers a response without the need for prior conditioning.

Fear-Producing Stimulus

An object, event, or situation that induces a fear response in an individual.

"Little Albert" Study

An experiment conducted by John B. Watson and Rosalie Rayner that demonstrated classical conditioning in humans by showing how an infant named Albert became conditioned to fear a white rat.