In the rational expectation model, government control over aggregate demand:
A) gives it the power to alter real output and employment even when the effects of government policies are expected.
B) can affect real output in the short-run only if policies are unexpected.
C) has potential to change long-run real output as long as the aggregate supply curve is vertical.
D) has highly unpredictable effects on real output in the long run.
Correct Answer:
Verified
Q88: When expectations of inflation are revised downward,
Q89: If inflation is underestimated by decision makers
Q90: If the actual unemployment rate is less
Q91: According to the natural rate hypothesis:
A)a short-term
Q92: If inflation rises or falls faster than
Q94: According to the rational expectation view, does
Q95: A decrease in the expected level of
Q96: Believers in the hypothesis of rational expectations
Q97: The expectation of a higher inflation rate
Q98: According to the theory of rational expectations,
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents