Assume That People Have Rational Expectations and Wages Are Fixed

question 31

Multiple Choice

Assume that people have rational expectations and wages are fixed by long-term contracts.If prices of goods can change fairly quickly, we should still expect that

• A)random shocks will not significantly affect the level of output
• B) labor markets will be in equilibrium longer than goods markets
• C)firms will not supply more output after a price increase
• D)unanticipated monetary policy changes will affect the level of real output in the short run
• E)none of the above

---

Definitions:

Preventative Facework

Strategies employed proactively to maintain or protect an individual's self-image or reputation in social interactions.

Facework

Strategies used to manage one's own image or face in social interactions, and to uphold or repair the face of others.

Face

is a sociolinguistic concept that refers to an individual's projected image or social value within interpersonal communications.

Self-worth

The subjective evaluation of one's own value as a person, often influenced by self-perception and external validation.