Under the rational expectations hypothesis, which of the following is the most likely long-run effect of a move to a more expansionary monetary policy?

a. higher prices and no change in real output
b. higher prices and expansion in real output
c. no change in prices but an expansion in real output
d. no change in either prices or real output


A

Economics

You might also like to view...

Tariffs can be used to redistribute income from

A) abundant factors to scarce factors. B) consumers to domestic producers. C) from one country to another. D) All of the above.

Economics

Whenever net external benefits exist then:

A.) economic profits are zero. B.) the social demand exceeds the market demand. C.) the benefits associated with a product fall short of those accruing to the market. D.) product differentiation increases the variety of products available to consumers.

Economics

Exhibit 9-2 A monopolistic competitive firm ? If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-2, we would expect that in the long run:

A. all firms will leave the industry. B. some firms will leave the industry. C. firms in the industry earn zero economic profits. D. a number of new firms will enter the industry.

Economics

"As compared to the benefits of economic and social regulation, the costs are minimal." Do you agree or disagree? Why?

What will be an ideal response?

Economics