If the Federal Reserve Conducts an Open Market Purchase, Holding

question 256

Multiple Choice

If the Federal Reserve conducts an open market purchase, holding everything else constant, in the long run there will be:

• A)an increase in the aggregate price level.
• B)an increase in the aggregate output level.
• C)a decrease in unemployment.
• D)no effects on output, unemployment, or the price level.

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Definitions:

Cloth Mother

A reference to the surrogate mother experiment in psychology, where infant monkeys showed a preference for a cloth-covered surrogate mother over a wire mesh surrogate that provided food.

Wire Mother

An experiment in developmental psychology by Harry Harlow, exploring attachment by showing that infant monkeys preferred soft, cloth surrogates over wire ones, even if the latter provided food.

Sensory Restriction

A condition or experimental setup where the amount or type of sensory input is limited or controlled to investigate its effects on the mind or behavior.

Adequate Stimulation

The sufficient levels of stimulus required to produce a perceptible response or reaction in sensory receptors or organisms.