If Expectations Are Adaptive,then What Is the Long-Run Danger of an Activist

question 20

Multiple Choice

If expectations are adaptive,then what is the long-run danger of an activist monetary policy?

• A) high inflation and high unemployment
• B) stagnant real gross domestic product (GDP)and high inflation
• C) underestimated inflation and high unemployment
• D) low real gross domestic product (GDP)growth and low unemployment
• E) sticky prices and high unemployment

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Definitions:

Confidence Interval

A range of values, derived from the sample data, that is likely to contain the value of an unknown population parameter, with a certain degree of confidence.

Sample Size

The number of observations or data points collected from a subset of a larger population for the purposes of statistical analysis.

Population Standard Deviation

The square root of the variance of a set of values in a population, measuring how spread out the values are.

Sample Size

The number of individual samples or observations collected in a statistical study.