If Individuals Form Rational Expectations, an Announced Policy of Reducing

question 34

Multiple Choice

If individuals form rational expectations, an announced policy of reducing the rate of growth in the money supply that is credible will result in:

• A) increased expectations of inflation.
• B) unchanged expectations of inflation.
• C) lower expectations of inflation.
• D) possibly any of the above depending on the current inflation rate.

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Definitions:

Contract

A promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty.

Collective Bargaining

The process whereby workers organize collectively and bargain with employers regarding the workplace.

Sexual Harassment

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.

Per Se

By itself; inherently, referring to something that is taken as a given and needs no additional proof.