Rational expectation theory implies that accurately anticipated change in aggregate demand:
a. will increase RGDP in the long run
b. will affect RGDP and inflation only in the long run.
c. may affect RGDP but not nominal GDP.
d. will tend to be offset by the actions of input suppliers as they react to their inflation expectations.
d
You might also like to view...
Recessions are largely the result of
A) high wages. B) the wishful thinking of zero economic growth advocates. C) widespread and systemic errors from manipulated market signals. D) none of the above.
Refer to Figure 13-13. If the diagram represents a typical firm in the market, what is likely to happen in the long run?
A) Inefficient firms will exit the market and new cost-efficient firms will enter the market. B) New firms will enter the market causing the demand to decrease for existing firms. C) Competition will be intensified as firms strive to make long-run profits. D) Some firms will exit the market causing the demand to increase for firms remaining in the market.
From the perspective of the classical model, many economists would say that the most important automatic stabilizer is
a. taxes b. imports c. interest rates d. transfer payments e. passage of time
The labor supply curve will be positively sloped if the substitution effect of wages is
A. Negative. B. Weaker than the income effect of wages. C. Stronger than the income effect of wages. D. Equal to the income effect of wages.