In the Aggregate Demand/aggregate Supply Framework, Lowering the Federal Funds

question 53

Essay

In the aggregate demand/aggregate supply framework, lowering the federal funds rate has what short-run effects on real GDP?

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Definitions:

Partial Reinforcement Effect

The tendency for a behavior to become more resistant to extinction following intermittent reinforcement than after continuous reinforcement.

Behavioral Contrast Effect

A phenomenon observed in conditioning where the response to a conditioned stimulus changes when an alternative stimulus is presented with different reinforcement conditions.

Extinction

In behavioral psychology, the process whereby a conditioned response decreases in frequency and eventually disappears as a result of the conditioned stimulus being presented without reinforcement.

Reinforcer

Any stimulus that strengthens or increases the likelihood of a behavior by its occurrence.