According to the theory of rational expectations, expansionary fiscal policy that is anticipated will:
a. cause wage expectations to adjust downward immediately following the lower price level.
b. increase the real wage rate in the long run.
c. cause a permanent decline in the natural rate of unemployment.
d. decrease the real wage rate in the long run.
e. cause wage expectations to adjust upward immediately following the higher price level.
e
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Which of the following is NOT a proposition of the Heckscher-Ohlin model?
A) A country has a comparative advantage in the production of that commodity which uses more intensively the country's more abundant resource. B) The effect of international trade is to tend to equalize factor prices between the trading nations. C) If Mexico is an unskilled labor abundant country, then Mexico has a comparative advantage in the production of goods that use unskilled labor more intensively. D) If the United States is a skilled labor abundant country, then the United States has a comparative advantage in the production of goods that use skilled labor more intensively. E) Countries will completely specialize in the product in which they have a comparative advantage if free trade is allowed to occur.
What is the benefit of a high saving rate?