According to the Lucas Supply Function, the Amount of Output

question 71

Multiple Choice

According to the Lucas supply function, the amount of output produced is not related to the price level if

• A) people's expectations of the price level are higher than the actual price level.
• B) people's expectations of the price level are on target.
• C) people's expectations of the price level are lower than the actual price level.
• D) people's expectations of the price level are either higher or lower than the actual price level.

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