Suppose the Economy Is Initially Operating at Point a in the Above

question 226

Multiple Choice

Suppose the economy is initially operating at point A in the above figure. Which of the following statements is TRUE?

• A) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the long run.
• B) An unexpected reduction in aggregate demand will cause the economy to move from point A to point B in the short run.
• C) An unexpected reduction in aggregate demand will cause the economy to move from point A to point C in the short run.
• D) none of the above

---

Definitions:

Sequential Theory

A theory suggesting that understanding and behavior result from sequences of stimuli and responses, often emphasizing the importance of order in learning processes.

Extinction Contrast Effect

The phenomenon wherein the cessation of a previously reinforced behavior is accelerated when an alternative behavior continues to be reinforced.

Nonreward

A situation where an expected reward is not given, leading to extinction of the conditioned response over time.

Primary Reinforcement

Primary Reinforcement involves a stimulus that satisfies a basic survival need and is inherently reinforcing, such as food or water.