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Suppose the Economy Is in Long-Run Equilibrium

question 162

Multiple Choice

Suppose the economy is in long-run equilibrium. The government has just decided to lower income taxes. The long-run impact of this policy will be _____ in the natural rate of unemployment and _____ in price level.


Definitions:

Discrimination Learning

The ability to differentiate between two or more stimuli, learning to respond to one stimulus but not the others.

Hull-Spence Model

A theory of learning that combines the drive-reduction theory of Clark Hull with the incentive theory of Kenneth Spence, focusing on how reinforcement and drive interact in producing learning behaviors.

Kohler's Relational Approach

A theory in gestalt psychology proposed by Wolfgang Köhler, emphasizing that the nature of parts of a whole is not determined just by the physical properties of the parts but by their relational roles within the whole context.

Continuity Theory

A psychological theory suggesting that individuals maintain a consistent pattern of behavior and personality throughout their life.

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