The Episode of Nine Successive Cuts in the Official Interest

question 123

Multiple Choice

The episode of nine successive cuts in the official interest rate in 2001 illustrates that,despite its stated goal of ensuring low and stable inflation,the Bank of Canada is also prepared to act pre-emptively to

• A) avoid future recessions.
• B) avoid future inflation.
• C) avoid future structural unemployment.
• D) avoid future expansionary gaps.
• E) avoid future budget deficits.

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Definitions:

Stimulus Eliciting

A process by which a specific stimulus provokes a response or reaction in an organism or system.

Response Paired

A concept in conditioning where a specific stimulus is repeatedly and consistently followed by a particular response.

Extinction

In psychology, the diminishing of a conditioned response, typically when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Repeated Pairings

A concept from behavioral psychology where repeated association of two stimuli results in the learning or conditioning of a response.