According to Some New Keynesian Theories, One Possible Rationale for Active

question 119

Multiple Choice

According to some New Keynesian theories, one possible rationale for active policy making is

• A) flexible prices.
• B) sluggish adjustment of the price level in response to changes in aggregate demand
• C) people are not rational and so do not react to incentives.
• D) growing competition in U.S. product markets.

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Definitions:

Behavior Modification

A psychological technique used to change or improve an individual's behaviors through reinforcement, punishment, and other strategies.

Negative Reinforcement

The strengthening of a behavior because a negative condition is stopped or avoided as a consequence of the behavior.

Positive Punishment

A method in behavioral psychology where an undesirable stimulus is introduced following a behavior to decrease the likelihood of that behavior occurring again.

Aversive Stimulus

A stimulus that is unpleasant and causes a decrease in the strength or frequency of the behavior it follows.