How Did Adaptive Expectations Theory Revolutionize the Way Economists Think

question 59

Multiple Choice

How did adaptive expectations theory revolutionize the way economists think about monetary policy?

• A) It taught that monetary policy should follow the Phillips curve model.
• B) It implied that monetary policy may not have real effects in the short run.
• C) It revealed that monetary policy may not have real effects in the long run.
• D) It implied that monetary policy must be expected to provide a stimulus.
• E) It taught that monetary policy should develop consistent expectations.

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Definitions:

Psychotherapy

A general term for treating mental health problems by talking with a psychiatrist, psychologist, or other mental health provider, involving a variety of techniques designed to improve the mental health of a client, or to improve group relationships (as in family therapy).

Cognitive Therapy

A type of psychotherapy that focuses on changing negative patterns of thought to improve emotional well-being and behavior.

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through conditioning techniques.

Bulimia

An eating disorder characterized by episodes of binge eating followed by purging to prevent weight gain.