Use the Following to Answer Questions

question 125

Multiple Choice

Use the following to answer questions .
Exhibit: Monetary Policy and Rational Expectations
-(Exhibit: Monetary Policy and Rational Expectations) Suppose the economy is operating at point a and that individuals have rational expectations. They calculate that expansionary monetary policy

• A) will raise the price level to P_d; and they adjust their expectations and wage demands shifting the short-run aggregate supply curve to AS₂.
• B) will raise the price level to P_c; and they adjust their expectations and wage demands shifting the short-run aggregate supply curve to AS₂.
• C) will raise the price level to P_b; and they adjust their expectations and wage demands shifting the short-run aggregate supply curve to AS₁.
• D) will keep the price level at P_a; and the short-run aggregate supply curve at AS₁.

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Definitions:

Strategic Thinking

The ability to anticipate, envision, maintain flexibility, and work with others to initiate changes that will create a viable future for an organization.

Serial Entrepreneurs

describes individuals who repeatedly start new businesses and take on the risk of being an entrepreneur, moving from one venture to the next.

Entrepreneurship

The process of establishing a company or companies, bearing financial uncertainties with the aspiration for gains.

Entrepreneurship

The process of designing, launching, and running a new business, often characterized by innovation, risk-taking, and the pursuit of profit.