According to rational expectations theory,
a. there is absolutely nothing government can do, even in the short run, to reduce the economy's unemployment rate.
b. the government can use fiscal policy such as increased government spending or lower tax rates to reduce unemployment.
c. a modern extension of Keynesian economics exists.
d. discretionary fiscal policy is essential for prolonged growth.
e. market participants can be fooled in the long run by monetary and fiscal policy rules.
a
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Holding other things constant, if the Japanese Yen, depreciates, it makes the imports to Japan
a. More expensive for Japanese customer b. Less expensive for Japanese customers c. Neither more or less expensive for importers d. None of the above
The more the short-run output exceeds an economy's potential, _____
a. the smaller the expansionary gap b. the greater the upward pressure on the price level c. the larger the recessionary gap d. the greater the downward pressure on the price level e. the lesser the demand for resources