When the Price Level Falls

question 40

Multiple Choice

When the price level falls

• A)The interest rate falls because people will want to hold more money and so sell bonds.
• B)Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes.
• C)Both A and B are correct.
• D)None of the above are correct.

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Definitions:

Conditioned Stimulus

A stimulus that, through association with an unconditioned stimulus, comes to elicit a conditioned response in classical conditioning.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior learning.

Psychic Secretions

Bodily reactions that occur in response to psychological stimuli, historically explored in the context of Pavlov's conditioning experiments.

Conditioned Responses

Learned reactions that occur in response to previously neutral stimuli, due to conditioning or association.