Use the Following to Answer Questions

question 139

Multiple Choice

Use the following to answer questions .
Exhibit: Monetary Policy and Rational Expectations
-(Exhibit: Monetary Policy and Rational Expectations) If rational expectations exist and the economy is initially operating at point d. If the Fed undertakes contractionary monetary policy the economy will

• A) spend some time at c with a recessionary gap.
• B) spend no time at c and move directly to b.
• C) bypass c and move to a, because the short-run aggregate supply curve shifts to the left.
• D) bypass c and move to a, because the short-run aggregate supply curve shifts immediately to the right and the economy moves down the long-run aggregate supply curve.

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Definitions:

Entire Income

The total amount of money received by an individual or household from all sources, including wages, salaries, investments, and any other earnings.

Units Of X

A measurement term used to quantify an item or commodity in discussion, often used in economics or production.

Units Of Y

This key term typically refers to the measurement of quantity for a variable Y, such as production output or consumption goods.

Milk Shakes

A sweet, cold beverage made from milk, ice cream, and flavorings or sweeteners such as butterscotch, caramel sauce, chocolate syrup, or fruit syrup.