The Natural Rate Hypothesis States That in the Long Run

question 113

Multiple Choice

The natural rate hypothesis states that in the long run,

• A)economic policy can reduce both inflation and unemployment
• B)the economy's natural rate of annual growth is approximately 3%
• C)monetary and fiscal policy have their greatest effect on the rate of unemployment
• D)the Phillips curve is horizontal
• E)the economy tends toward the natural rate of unemployment

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Definitions:

James

Refers to William James, an American philosopher and psychologist who is often referred to as the "Father of American psychology".

Ancient Greeks

The Ancient Greeks were people belonging to the Greek civilization during a period from the Dark Ages about 1200 BCE to the end of antiquity (c. 600 AD). This era was marked by significant developments in art, philosophy, science, and politics.

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning, without considering thoughts or feelings.

Watson

John B. Watson is considered the father of behaviorism, a school of psychology focusing on observable behaviors rather than mental processes.