When the Economy Is at Its Potential Output Level,which of the Following

question 76

Multiple Choice

When the economy is at its potential output level,which of the following is not true?

• A)Firms' and workers' expectations about the price level are realized.
• B)The nominal wage is a good measure of the expected real wage.
• C)The unemployment rate is about 4 to 6 percent.
• D)The economy is producing the maximum output it can produce in short periods of time; however,such a fast pace could not be maintained for long.
• E)The actual price level equals the expected price level.

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Definitions:

Extinction

In psychology, the gradual weakening and eventual disappearance of a conditioned response when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Conditioned Stimulus

A stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

Unconditioned Stimulus

A stimulus that naturally triggers a response without the need for prior learning.

Counterconditioning

A therapeutic process aimed at reversing the negative effects of a conditioned response by introducing a new, positive stimulus.