One Result of the Lucas Rational-Expectations Model Is That an Anticipated

question 64

Multiple Choice

One result of the Lucas rational-expectations model is that an anticipated increase in the money supply

• A) becomes more effective in manipulating GDP when firms' pricing decisions are more responsive to forecasts of general price levels.
• B) is completely ineffective in manipulating GDP if firms' pricing decisions are not responsive to forecasts of general price levels.
• C) is completely ineffective in manipulating GDP because monetary policy does not affect aggregate demand.
• D) b and c only.
• E) none of the above.

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Definitions:

Ego Control

In Jack Block’s personality theory, the psychological tendency to inhibit the behavioral expression of motivation and emotional impulse. At the extremes, people may be either undercontrolled or overcontrolled.

Neuroticism/Extraversion

Personality traits where neuroticism involves emotional instability and extraversion involves being outgoing and energetic.

Negative Emotionality/Positive Emotionality

Refers to the tendency of individuals to experience negative or positive emotions more frequently or intensely, indicating a fundamental aspect of personality.

Politically Conservative

Holding beliefs that emphasize tradition, authority, and resistance to change in political and social systems.