Under adaptive expectations,which of the following will likely be an initial effect of an unanticipated shift to a more restrictive macroeconomic policy?

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Under adaptive expectations, individuals form expectations about future inflation based on past inflation. An unanticipated shift to a more restrictive macroeconomic policy will lead to a decrease in inflation in the short run. This is because the policy will reduce aggregate demand, which will in turn reduce the prices of goods and services. In the long run, the decrease in inflation will lead to a decrease in output, as firms will reduce production in response to the lower demand.

Under Adaptive Expectations,which of the Following Will Likely Be an Initial