A conclusion of the theory of rational expectations is that, in the short run, the impact of a correctly anticipated fiscal policy designed to decrease AD will:
A)result in no net change in AD once people's expectations adjustments have been accounted for.
B)shift AD in the opposite direction intended once people's expectations adjustments have been accounted for.
C)decrease the price level.
D)result in no change in the price level.

Question

A conclusion of the theory of rational expectations is that, in the short run, the impact of a correctly anticipated fiscal policy designed to decrease AD will:
A)​result in no net change in AD once people's expectations adjustments have been accounted for.
B)​shift AD in the opposite direction intended once people's expectations adjustments have been accounted for.
C)​decrease the price level.
D)​result in no change in the price level.

Quizplus · Accepted Answer

The Answer of A conclusion of the theory of rational expectations is that, in the short run, the impact of a correctly anticipated fiscal policy designed to decrease AD will:
A)​result in no net change in AD once people's expectations adjustments have been accounted for.
B)​shift AD in the opposite direction intended once people's expectations adjustments have been accounted for.
C)​decrease the price level.
D)​result in no change in the price level.

A Conclusion of the Theory of Rational Expectations Is That