If expectations are formed rationally,wages and prices are completely flexible in both the short run and the long run,and policy is correctly anticipated,increases in aggregate demand will stimulate the economy to higher levels of Real GDP in

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In a scenario where expectations are formed rationally, wages and prices are completely flexible, and policy is correctly anticipated, increases in aggregate demand would not change the level of Real GDP in the long run due to the economy's self-correcting mechanism. The economy adjusts to its potential output level, rendering demand-side policies ineffective in altering real output in the long run.

If Expectations Are Formed Rationally,wages and Prices Are Completely Flexible