If the Rational Expectations Theory Is Correct, the Federal Reserve's

question 208

Multiple Choice

If the rational expectations theory is correct, the Federal Reserve's announced policies will be

• A) effective in both the long run and the short run.
• B) effective in the short run only.
• C) ineffective in the short run but effective in the long run.
• D) ineffective in both the short run and the long run.

---

Definitions:

Flooding

A psychological therapy technique aimed at treating phobias and anxiety disorders by exposing the patient to their feared object or situation in a controlled environment.

Snakes

Limbless, elongated reptiles belonging to the suborder Serpentes, known for their unique method of slithering locomotion.

Session

A meeting or assembly for a specific purpose, often implying a limited duration and a defined agenda or activity.

Participant Modeling

A behavior therapy in which an appropriate response to a feared stimulus is modeled in graduated steps and the client attempts to imitate the model step by step, encouraged and supported by the therapist.