Assuming that the rational expectations hypothesis is NOT in effect, in the short run an expansionary monetary policy should
A) generate stagflation.
B) shift the aggregate supply function.
C) increase real Gross Domestic Product (GDP) and the price level.
D) increase the rate of unemployment.
C
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If disposable income increases from $5 trillion to $6 trillion and, as a result, consumption expenditure increases from $7 trillion to $7.8 trillion, the MPC is
A) 1.0. B) 6 ÷ 7 = 0.86. C) 6 ÷ 7.8 = 0.77. D) 5 ÷ 7 = 0.71. E) 0.8.
An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?
A) current account, a Japanese good import B) current account, a U.S. good import C) financial account, a U.S. asset import D) financial account, a U.S. asset export E) a current account as a U.S. good import and a financial account, a U.S. asset export