When the Output of an Economy Exceeds the Economy's Full-Employment

question 74

Multiple Choice

When the output of an economy exceeds the economy's full-employment capacity,

• A) aggregate supply will increase until the economy can produce the output at the existing price level.
• B) the actual rate of unemployment will be less than the natural rate.
• C) wage rates and resource prices will tend to fall.
• D) interest rates will decline and help direct the economy back to full employment.

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Definitions:

Participant Modeling

A behavior therapy in which an appropriate response to a feared stimulus is modeled in graduated steps and the client attempts to imitate the model step by step, encouraged and supported by the therapist.

Phobia Extinction

The process where a phobia diminishes or disappears after repeated exposure to the feared object or situation without any negative consequences.

Flooding

A psychological treatment method where a person is exposed to their fear at full intensity in order to help them overcome it.

Fear-Provoking Situation

A circumstance or setting that induces a response of fear or anxiety, often leading to avoidance or defensive behaviors.