(Figure: Understanding Expectation Theories) Assume the Economy Is at Point

question 93

Multiple Choice

(Figure: Understanding Expectation Theories) Assume the economy is at point c. According to the theory of adaptive expectations, if the Federal Reserve announces and then implements a contractionary policy, the economy will move from point c to point:

• A) a to point d.
• B) b to point d.
• C) d directly.
• D) a to point b.

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Definitions:

Generations

Sequential stages in the familial lineage, where an individual's successors are considered a new generation.

Disruptive Selection

A special type of directional selection in which changes in the environment favor two or more variant phenotypes at the expense of the mean. Compare with stabilizing selection and directional selection.

Directional Selection

A mode of natural selection in which an extreme phenotype is favored over other phenotypes, causing the allele frequency to shift over time in the direction of that phenotype.

Trend

A general direction in which something is developing or changing; often used to describe patterns or tendencies in data.