-Refer to Exhibit 16-2.The Policy Ineffectiveness Proposition could be illustrated by a movement between points A and

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The Policy Ineffectiveness Proposition, associated with rational expectations theory, suggests that systematic monetary policy does not have real effects on output because individuals will anticipate the policy and adjust their behavior accordingly. Moving from point A to point B in a typical macroeconomic model (like the AD-AS model) would illustrate a situation where output and price level remain unchanged despite a policy attempt, reflecting the essence of the Policy Ineffectiveness Proposition.