The Rational Expectations Model Asserts That the Monetary Policy Multiplier

question 37

Multiple Choice

The rational expectations model asserts that the monetary policy multiplier

• A)is larger than the fiscal policy multiplier but only in the long run
• B)can be large in the short run but is zero in the long run
• C) is zero in the short run and large in the long run
• D)can be zero if the Fed has no credibility
• E)is always zero for any unannounced policy changes

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Definitions:

Stay Agreement

A legal document that temporarily suspends proceedings or actions as agreed upon by the involved parties.

Materially Breached

signifies a significant failure to comply with the terms of a contract, invalidating the agreement.

Adequate Consideration

Consideration in a contract that is fairly equitable and of sufficient value, considering the facts of the case and the circumstances surrounding the agreement.

Forbearance

The temporary postponement of mortgage payments or enforcement of a policy, often to prevent foreclosure.