Consumer Confidence in the Economy Rises, and as a Result

question 192

Multiple Choice

Consumer confidence in the economy rises, and as a result, real GDP increases above potential GDP. To move U.S. GDP back to potential GDP, the Fed should

• A) lower the federal funds rate.
• B) raise the federal funds rate.
• C) increase the government's budget deficit.
• D) decrease the government's budget deficit.

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Definitions:

Discrimination

The unjust or prejudicial treatment of different categories of people or things, especially on the grounds of race, age, or sex.

Classical Conditioning

A teaching method that employs the repetitive pairing of two stimuli; over time, the response initially caused by the second stimulus becomes caused by the first stimulus alone.

CS

An abbreviation that can stand for "Conditioning Stimulus" in behavioral psychology, relating to the process by which a neutral stimulus becomes associated with a reflexive response.

Extinction

In the field of psychology, the slow reduction and final fading of a learned response occurs when the conditioned stimulus isn't combined with the unconditioned stimulus anymore.