Macroland's Government Reduces Taxes in an Effort to Move Its

question 7

Multiple Choice

Macroland's government reduces taxes in an effort to move its economy back to its natural rate of output. According to the AS/AD model, the tax reduction will:

• A) stimulate aggregate demand and help resolve a short-run recession.
• B) stimulate long-run aggregate supply to reduce inflation.
• C) control government spending to reduce inflationary pressures.
• D) reduce consumer spending and increase savings, which will resolve a recession.

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Definitions:

Negative Reinforcement

A behavioral conditioning technique where the removal of an unpleasant stimulus strengthens a behavior.

Praises

Expressions of approval, commendation, or admiration.

Observational Learning

The method of adopting behaviors by monitoring and copying others.

Classical Conditioning

A learning process that involves pairing a previously neutral stimulus with an unconditioned stimulus to elicit a conditioned response.