Ans: D) an increased price level, but no change in real Gross Domestic Product (GDP) in the long run.
Assume the Fed initiates an expansionary monetary policy that is correctly anticipated by economic agents in the economy. According to the rational expectation hypothesis, the result is
A) an increased price level in the short run, but no effect on price level in the long run.
B) decreased real Gross Domestic Product (GDP) in the short run, but increased real Gross Domestic Product (GDP) in the long run.
C) increased real Gross Domestic Product (GDP) and increased employment in the long run.
D) an increased price level, but no change in real Gross Domestic Product (GDP) in the long run.
Economics
You might also like to view...
Marginal revenue is the change in total revenue from selling one more unit of output
a. True b. False
Economics
Which of the following observations is true of nontransaction deposits?
a. depositor can use them directly as a means of payment b. they do not pay any interest c. depositor cannot directly write checks against them d. they generally pay lower interest rates than transaction deposits
Economics
If the U.S. inflation rate is 3 percent annually and the Swiss inflation rate is 5 percent annually, by what percent would the dollar price of francs need to change according to purchasing power parity?
a. Depreciate by 5 percent b. Appreciate by 3 percent c. Appreciate by 5 percent d. Depreciate by 2 percent e. Appreciate by 2 percent
Economics
The production decision is the:
A.) Selection of the short-run rate of output. B.) Selection of the long-run rate of output. C.) Choice of whether to enter or exit the industry. D.) Choice of factory or plant size.
Economics