According to the Rational Expectations Model, How Would an Announcement

question 226

Multiple Choice

According to the rational expectations model, how would an announcement of expansionary monetary policy affect aggregate output?

• A) It would have no effect on aggregate output.
• B) It would decrease aggregate output.
• C) It would increase aggregate output in the short run.
• D) It would increase aggregate output in both the short run and the long run.

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Definitions:

Implicit Memory

A type of memory that enables the use of objects or skills without conscious or intentional recollection of learning them.

Explicit Memory

A type of long-term memory involving conscious recollection of factual information, previous experiences, and concepts.

Implicit Memory

A type of memory that enables us to perform tasks without conscious awareness of these previous experiences.

Classical Conditioning

An educational mechanism where two stimuli are repeatedly linked together; eventually, a response originally provoked by the second stimulus is induced by only the first stimulus.