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:

Low Attrition

A situation where there is a minimal rate of reduction or loss of employees or participants over time, indicating stability.