The Proponents of Adaptive Expectations Believe That

question 59

Multiple Choice

The proponents of adaptive expectations believe that

• A) there will be a substantial time lag before people anticipate the effects of a shift to a more expansionary macro-policy.
• B) macro-policies that stimulate demand and place upward pressure on the general level of prices will temporarily increase output and employment.
• C) discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.
• D) all of the above are true.

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Definitions:

Source Document

An original record, such as an invoice or receipt, that evidences a business transaction.

Indirect Materials

Indirect materials are those materials used in the production process but are not directly traceable to specific products, such as lubricants for machinery.

Work in Process Inventory

Goods that are in the production process but have not yet been completed; represents one of the stages in manufacturing inventory.

Journal Entry

A recorded transaction in the accounting books of a business, which is used to document financial activities and maintain the integrity of financial statements.