A conclusion of the theory of rational expectations is that the impact of discretionary fiscal policies designed to shift the aggregate demand curve will
A. result in no net change in aggregate demand.
B. be anticipated and compensated for, causing no significant change in real GDP or employment levels.
C. be completely opposite of the intended result.
D. be incorrectly evaluated by most economists.
B. be anticipated and compensated for, causing no significant change in real GDP or employment levels.
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Which one of the following is the most accurate definition of economics?
a. Economics is the study of stocks and bonds. b. Economics is the study of how people allocate unlimited resources. c. Economics is the study of how consumers choose to spend their income. d. Economics is the study of how society chooses to allocate scarce resources.
If national income = $2,000 . autonomous consumption = $100, the MPC = 0.80, and intended investment demand is $500, then actual investment will
a. equal intended investment, and the economy will be in equilibrium b. be less than intended investment, and production and incomes will grow c. be greater than intended investment, and production and incomes will fall d. be less than intended investment, and production and incomes will fall e. be greater than intended investment, and production and incomes will grow
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
What does the maturity of a bond indicate?