One Strategy Consistent with the New Classical Macroeconomists' Theories Would

question 9

Multiple Choice

One strategy consistent with the new classical macroeconomists' theories would have

• A) fiscal policy focus on maintaining full employment regardless of the size of the resulting budget deficit.
• B) monetary policy stick to an announced policy to keep the rate of inflation to some specified low figure.
• C) the government emphasize policies of wage and price controls to achieve a targeted full-employment rate with stable prices.
• D) monetary authorities impose a structure of variable tax rates that automatically adjusts to changes in the unemployment rate.
• E) both fiscal and monetary policy coordinated in a way that ensures that both the Phillips curve and long-run aggregate supply curves are vertical.

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Definitions:

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Negative Reinforcement

A behavioral principle where the removal of an unfavorable event or outcome after the display of a behavior increases the likelihood of that behavior being repeated in the future.

Fixed-Ratio Schedule

A schedule of reinforcement where a response is rewarded only after a specified number of responses have been made.

Negative Reinforcement

A process in behavioral psychology where the removal of an undesirable or unpleasant stimulus following a desired behavior increases the likelihood of that behavior being repeated.