If Rational Expectations Theory Is Correct, Then Any Increase in Aggregate

question 200

Multiple Choice

If rational expectations theory is correct, then any increase in aggregate demand caused by announced expansionary policies

• A) leads to a short-run increase in real output but no long-run increase.
• B) causes the inflation rate to fall.
• C) is offset by rising inflationary expectations, causing the short-run aggregate supply curve to immediately shift to the left.
• D) is offset by rising inflationary expectations, causing the short-run aggregate supply curve to slowly shift to the left.

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Definitions:

Stratified Random Samples

A sampling method that involves dividing the population into subgroups (strata) and randomly selecting samples from each stratum, aiming to ensure representation of key subgroups.

Cluster Samples

A sampling technique where the population is divided into groups, or clusters, and a random sample of these groups is selected to be surveyed or studied.

Target Population

The entire group about which a researcher wishes to make conclusions based on a statistical study.

Exclusion Bias

A systematic error that occurs when certain groups or individuals are left out of the sample, leading to biased results.