How Would Each of the Following Events Affect the Level

question 68

Essay

How would each of the following events affect the level of employment and the real wage rate?
(a)A tremendous boom occurs in the stock market,increasing people's wealth by $100 billion overnight.
(b)A major government loan-guarantee program goes bust,losing $500 billion.To pay off the loss,the government announces that tax rates will rise 30% in the future.
(c)A nuclear mishap contaminates all auto plants in the Detroit area,destroying their capital.
(d)Medical science cures the common cold,causing fewer work days lost due to illness,thus greatly increasing labor productivity.

---

Definitions:

Positive Reinforcement

Adding a desirable stimulus to increase a behavior, making it more likely to occur in the future.

Punishment

A consequence or penalty imposed for a perceived or actual offense, intended to reduce or eliminate undesirable behaviors.

Classical Conditioning

An educational process that unfolds by linking an external stimulus with a naturally happening stimulus, which results in a conditioned response.

Classical Conditioning

is a learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.