One key implication of rational expectations is that
A) anticipated monetary policy has no effect on the rate of unemployment or the level of real GDP.
B) unanticipated monetary policy has no effect on the economy but anticipated monetary policy does have an effect on the economy.
C) anticipated monetary policy can affect the rate of unemployment but not the level of real GDP.
D) both unanticipated monetary policy and anticipated monetary policy have an effect on the economy.
C
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If a voter expects to have little effect on government choices, that voter's behavior will reflect
a. rational ignorance b. a cyclical majority c. rent seeking d. vote trading e. a zero-sum game
As inflation increases, for any fixed nominal interest rate, the real interest rate:
A. decreases. B. decreases by less than the increase in inflation. C. remains the same, that's why it is real. D. also increases.
Price elasticity of demand is the responsiveness of
A. demand for a good to a change in the demand for another good. B. demand to a change in income. C. the quantity demanded to a change in price. D. demand to a change in supply.
If the long-run aggregate supply curve is vertical, fiscal policy will have no effect on output.
Answer the following statement true (T) or false (F)