Rational expectations theory implies that the more completely the effects of policy makers are foreseen, the smaller their short run effects on real output and unemployment, and the greater their short run effects on the price level
a. True
b. False
Indicate whether the statement is true or false
True
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If the price of a good rises and the consumer's budget remains the same, what happens to the consumer's consumption possibilities?
What will be an ideal response?
Suppose the United States enters a recession, what type of unemployment would be most likely to rise as a result of the recession?
Select one: a. Frictional unemployment b. Sectoral unemployment c. Cyclical unemployment d. Seasonal Unemployment
An increase in the real exchange rate will tend to ________ exports and to ________ imports.
A. increase; increase B. decrease; increase C. increase; decrease D. decrease; decrease
The average propensity to consume is consumption:
a. Multiplied times savings b. Multiplied times investment c. Divided by disposable income d. Divided by saving