According to the New Classical Economists, with Rational Expectations, an Increase

question 18

Multiple Choice

According to the New Classical economists, with rational expectations, an increase in the money supply will

• A) lead only to an increase in prices in both the short run and the long run.
• B) lead to an increase in the equilibrium level of income in the short run but to no change In the equilibrium level of income in the long run.
• C) lead to a fall in prices but to no change in money wages.
• D) lead to a rightward shift in the long-run aggregate supply curve.

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Definitions:

Human Behavior

The range of actions and mannerisms exhibited by humans in conjunction with their environment, influenced by culture, attitudes, emotions, and values.

Internal Causes

Reasons or factors that originate within an individual or system, leading to certain outcomes or behaviors.

External Causes

Factors or conditions outside of an individual's control that impact events or outcomes, often used in analyzing behaviors or situations.

Self-Serving Bias

The tendency to attribute one’s successes to internal causes and one’s failures to external causes.