Figure 26-6 -Refer to Figure 26-6.In the Dynamic Model of AD-AS in Model

question 3

Multiple Choice

Figure 26-6

-Refer to Figure 26-6.In the dynamic model of AD-AS in the figure above,the economy is at point A in year 1 and is expected to go to point B in year 2,and the Federal Reserve pursues policy.This will result in

• A) unemployment rates higher than what would occur if no policy had been pursued.
• B) inflation higher than what would occur if no policy had been pursued.
• C) real GDP lower than what would occur if no policy had been pursued.
• D) short-term interest rates higher than what would occur if no policy had been pursued.

---

Definitions:

Punishment

The imposition of a penalty as a response to an undesired action or behavior, aimed at discouraging its recurrence.

Negative Behavior

Actions or conduct that are harmful, destructive, or undesirable, negatively affecting the individual involved or others.

Reinforcement

A principle in behavioral psychology that increases the likelihood of a behavior repeating by applying a consequence, positive or negative, following that behavior.

Contrived Extrinsic Rewards

Incentives that are intentionally created to motivate specific behaviors or outcomes, which might not inherently be rewarding.