Which of the Following Is True Regarding the Closing of a Contractionary

question 6

Multiple Choice

Which of the following is true regarding the closing of a contractionary gap?

• A)The only way for the gap to close is for nominal wages to rise.
• B)Such a gap could be closed if the nominal wage grew more slowly over time than the price level.
• C)Once the economy falls into a contractionary gap,only a strong reduction in aggregate demand could close the gap.
• D)Inflation eventually ends contractionary gaps.
• E)Nominal wages and real wages should rise.

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Definitions:

Extinction

In behavioral psychology, the process by which a conditioned response decreases in frequency and eventually disappears when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Classical Conditioning

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

CS

Short for Conditioned Stimulus, it is a previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

UCS

An abbreviation for Unconditioned Stimulus, a stimulus that naturally and automatically triggers a response without any need for prior learning.