A Monetary Contraction Is Most Successful When It Is Credible,namely

question 178

Multiple Choice

A monetary contraction is most successful when it is credible,namely when:

• A) disinflation supersedes inflation.
• B) the effect of fiscal policy is weakening.
• C) market participants expect the central bank to carry through its tough stance.
• D) market participants are uncertain about the current state of the economy.

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Definitions:

Reinforcement

A process in behaviorism that increases the likelihood of a behavior repeating by applying a stimulus following that behavior.

DRL Schedule

A type of reinforcement schedule where a response is only reinforced if it occurs after a specified amount of time has passed since the last reinforced response.

Reinforcement

In behaviorism, a stimulus or event that follows a behavior and increases the likelihood of that behavior's recurrence.

Variable-ratio

A schedule of reinforcement where a response is reinforced after an unpredictable number of responses, making it highly resistant to extinction.