According to the Lucas' Rational Expectations Approach

question 18

Multiple Choice

According to the Lucas' rational expectations approach,

• A)people may not always forecast accurately, but they do not make systematic errors
• B)anticipated changes in money supply have no real effect on output
• C)unanticipated changes in money supply have only a short-lived effect on output and are soon reflected in a proportional price change
• D)nominal wages are set on the basis of expected prices, and if expectations are wrong, output and employment will be affected
• E)all of the above

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Definitions:

Asians

People originating from or associated with the continent of Asia, which includes diverse cultures, languages, and ethnicities.

Prejudice

A preconceived opinion or judgment, often based on limited information or stereotypes.

Bias

A tendency to judge people before knowing them, basing the judgment only on their membership in some group or category of people.

Hostile Environment

A workplace situation where harassment or discriminatory practices make it difficult for an employee to work.