Which Market Adjusts the Quickest in Response to Shocks to the Economy

question 65

Multiple Choice

Which market adjusts the quickest in response to shocks to the economy?

• A)The asset market
• B)The labor market
• C)The goods market
• D)The asset, labor, and goods markets adjust at about the same speed to eliminate a disequilibrium in the macroeconomy.

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Definitions:

Cognitive Dissonance

The psychological discomfort experienced when holding two or more conflicting cognitions (beliefs, attitudes, or behaviors).

Conditioning

The process of learning associations between environmental events and behavioral responses, crucial in behaviorist theories of learning.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors, often driven by needs, desires, and goals.

Law of Effect

A psychological principle stating that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are less likely to be repeated.