Under the adaptive expectations hypothesis, how will a shift to a more expansionary monetary policy affect the economy?
a. In the short run, the real rate of output will be unaffected, but in the long run, it will increase.
b. In the short run, the real rate of output will increase, but in the long run, it will be unchanged.
c. There will be a permanent increase in the real rate of output, but the inflation rate will also be a little higher.
d. In the short run, the impact on the real rate of output is uncertain, but in the long run, output will increase.
B
You might also like to view...
According to the IGM poll, most economists think that the crowding out effects were stronger than the stimulative effects of ARRA
a. True b. False Indicate whether the statement is true or false
(Last Word) Art Buchwald's article "Squaring the Economic Circle" is a humorous description of:
A. a negative GDP gap. B. a positive GDP gap. C. the marginal propensity to save. D. the multiplier.