The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public
A. the change in real output will be negative.
B. the change in real output will be positive.
C. there will be no change in real output.
D. Both A and B are possible, depending on they type of monetary policy change that has been announced.
Answer: C
You might also like to view...
A graphical analysis of tariffs reveals that
A. they benefit domestic consumers at the expense of domestic producers. B. their revenue gains outweigh the costs to domestic consumers. C. although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs. D. they increase domestic production of the good for which imports face tariffs.
The slowdown in U.S. economic growth in the period 1974-95 was primarily caused by ________
A) falling labor growth B) falling capital growth C) falling productivity growth D) none of the above
A decrease in the availability of an important major resource such as oil shifts aggregate supply left.
Answer the following statement true (T) or false (F)
An increase in consumer desire for strawberries is most likely to:
A. increase the number of strawberry pickers needed by farmers. B. reduce the supply of strawberries. C. reduce the number of people willing to pick strawberries. D. reduce the need for strawberry pickers.