Starting from an Initial Long-Run Equilibrium, Under the Adaptive Expectations

question 8

Multiple Choice

Starting from an initial long-run equilibrium, under the adaptive expectations hypothesis, a shift to a more expansionary policy will increase

• A) prices and unemployment in the long run.
• B) real output in the short run but not in the long run.
• C) real output in the long run but not in the short run.
• D) real output in both the long run and the short run.

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Definitions:

Median

A statistical measure representing the middle value in a data set, where half the numbers are above and half are below.

Mode

The number that occurs more often than any other in a sample.

Evidence

Material or information used to support facts or propositions in various contexts, such as legal or scientific.

Knowledge Management

The process of creating, sharing, using, and managing the knowledge and information of an organization to enhance its performance and competitiveness.