Under the adaptive expectations hypothesis, which of the following is the effect of a shift to a more expansionary monetary policy?
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 unemployment rate will decrease, but in the long run, it will self correct to the natural rate of unemployment.
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
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Of the recessions and expansions from 1950 to 1990, the common events were
a. reactions to war and oil prices b. tax increases and tax cuts c. changes in exports d. Decreases in welfare spending e. Increases and decreases in health care spending
Assume that a college student spends her income on mac-n-cheese and CDs. The price of one box of mac-n-cheese is $1, and the price of one CD is $12 . If she has $200 of income, she could choose to consume
a. 30 boxes of mac-n-cheese and 12 CDs. b. 40 boxes of mac-n-cheese and 14 CDs. c. 20 boxes of mac-n-cheese and 16 CDs. d. 60 boxes of mac-n-cheese and 12 CDs.