The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless

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The rational expectations hypothesis suggests that individuals form expectations about the future based on all available information, including anticipated policy changes. Therefore, a monetary policy aimed at altering real GDP will only succeed if it includes unanticipated changes in the money supply, as people cannot adjust their behavior in advance to counteract the policy's effects if they are unexpected.

The Rational Expectations Hypothesis Indicates That a Monetary Policy Designed