In a Case Where Price Expectations Are Rational but Wages

question 26

Multiple Choice

In a case where price expectations are rational but wages nonetheless adjust very slowly

• A)only unanticipated monetary policy changes can affect output
• B)anticipated fiscal policy changes cannot affect output
• C)even anticipated monetary policy changes can affect output
• D)neither fiscal nor monetary policy can reduce unemployment
• E)even misguided government policy will not change real output

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Definitions:

Simple Linear Regression

A statistical method that allows us to summarize and study relationships between two continuous (quantitative) variables.

Standard Error

A measure of the dispersion or variability of a sampling distribution.

Slope

The measure of the steepness or incline of a line, defined as the ratio of the vertical change to the horizontal change between two points on the line.

True Slope

The actual slope of the relationship between two variables in the population, as opposed to an estimated slope.