According to Rational Expectations Theory, Discretionary Monetary and Fiscal Policy

question 36

Multiple Choice

According to rational expectations theory, discretionary monetary and fiscal policy will be ineffective primarily because of the

• A)successes of macroeconomic policymakers
• B)inability of policymakers to time decisions properly.
• C)reaction of the public to the expected effects of policy changes.
• D)slow impact of policy to stimulate changes in real output and employment.

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Definitions:

Direct Labour

The labor costs that are directly attributable to the production of goods or services.

Manufacturing Overhead

Manufacturing overhead encompasses all indirect costs associated with the production process, such as utilities, maintenance, and factory supervisor salaries, not including direct materials or labor.

Direct Cost

A cost that can be directly traced to the production of specific goods or services, such as raw materials and labor.

Cost Object

Any item for which a separate measurement of costs is desired, such as products, services, projects, customers, or activities.