Asked by McKall Hulsey on Jul 08, 2024
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Ms.Jones is a professor at a university.She strongly supports the rational expectations theory.She is likely to believe that the only time active policy has an impact on aggregate output is when:
A) an expansionary policy is implemented.
B) a recessionary policy is implemented.
C) policy changes are unannounced.
D) the economy has a recessionary gap.
E) the economy has an expansionary gap.
Rational Expectations Theory
A hypothesis proposing that individuals form forecasts about the future based on all available information in an unbiased and consistent manner.
Aggregate Output
Aggregate Output is the total value of all goods and services produced in an economy over a given period of time.
Active Policy
A government policy aimed at reducing unemployment and stimulating economic growth through proactive measures like tax cuts or increased government spending.
- Examine the impact of both expected and unexpected policies on inflation and output levels.
- Acquire insight into the viewpoints and conclusions drawn by the rational expectations school on monetary and fiscal policy.
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Learning Objectives
- Examine the impact of both expected and unexpected policies on inflation and output levels.
- Acquire insight into the viewpoints and conclusions drawn by the rational expectations school on monetary and fiscal policy.
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