Under the Rational Expectations Hypothesis, Which of the Following Is

question 31

Multiple Choice

Under the rational expectations hypothesis, which of the following is the most likely long-run effect of a move to a more expansionary monetary policy?

• A) higher prices and no change in real output
• B) higher prices and expansion in real output
• C) no change in prices but an expansion in real output
• D) no change in either prices or real output

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