Figure 11-6 -Refer to Figure 11-6. If Rational Expectations Exist and the Exist

question 116

Multiple Choice

Figure 11-6
-Refer to Figure 11-6. If rational expectations exist and the economy is initially operating at Jpoint d. If the Fed undertakes contractionary monetary policy the economy will

• A) spend some time at c with a recessionary gap.
• B) spend no time at c and move directly to b.
• C) bypass c and move to a, because the short-run aggregate supply curve shifts to the left.
• D) bypass c and move to a, because the short-run aggregate supply curve shifts immediately to the right and the economy moves down the long-run aggregate supply curve.

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Definitions:

Two-factor Theory

A psychological theory that suggests job satisfaction and dissatisfaction arise from two distinct sets of factors: hygiene factors and motivators.

Job Satisfaction

The level of contentment employees feel with their job, which can affect their performance, attitude, and motivation.

Advancement

Progress or promotion to a higher rank or position.

Need for Achievement

A psychological trait that drives individuals to pursue and attain goals.