If a policy change by the Bank of Canada is ________,then the change in policy has exactly the same result on the economy as it does when we assume that households and firms have adaptive expectations.
A) unannounced or not credible
B) unannounced or credible
C) announced or credible
D) announced or not credible

Question

Quizplus · Accepted Answer

If a policy change is unannounced or not credible, households and firms will not adjust their expectations immediately, similar to adaptive expectations where adjustments are based on past experiences rather than forward-looking information.

If a Policy Change by the Bank of Canada Is