According to the Rational Expectations Theory, Expansionary Monetary Policy Is

question 138

Multiple Choice

According to the rational expectations theory, expansionary monetary policy is fully effective only if

• A) the policy is anticipated by workers and firms.
• B) aggregate supply shifts to the left.
• C) the economy is operating at or above its potential output level.
• D) policy makers follow through on their previously announced plans.
• E) the effects of the policy are unexpected.

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