Which of the following statements is true about the misperceptions theory?
A)Both anticipated and unanticipated changes in the nominal money supply have real effects on the economy.
B)Neither anticipated nor unanticipated changes in the nominal money supply has real effects on the economy.
C)Unanticipated changes in the nominal money supply have real effects, but anticipated changes are neutral.
D)Anticipated changes in the nominal money supply have real effects, but unanticipated changes are neutral.

Question

Quizplus · Accepted Answer

The misperceptions theory suggests that unanticipated changes in the nominal money supply can have real effects on the economy because people may react to these changes in ways that affect their spending and investment decisions. Anticipated changes, on the other hand, are believed to have no real effects because people have already incorporated them into their expectations. Therefore, only C is true.

Which of the Following Statements Is True About the Misperceptions