Under the Adaptive Expectations Hypothesis, Which of the Following Is

question 31

Multiple Choice

Under the adaptive expectations hypothesis, which of the following is the effect of a shift to a more expansionary monetary policy?

• A) In the short run, the real rate of output will be unaffected, but in the long run, it will increase.
• B) In the short run, the unemployment rate will decrease, but in the long run, it will self correct to the natural rate of unemployment.
• C) There will be a permanent increase in the real rate of output, but the inflation rate will also be a little higher.
• D) In the short run, the impact on the real rate of output is uncertain, but in the long run, output will increase.

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Definitions:

Dendrite

Extensions of neurons that receive signals from other neurons, playing a crucial role in the transmission of neural information.

Nucleolus

A small dense spherical structure in the nucleus of a cell during interphase, involved in the production and assembly of ribosomes.

Parasympathetic Nervous System

A component of the autonomic nervous system that plays a crucial role in energy conservation and reducing the heart rate, among various other tasks.

Somatic

Pertaining to the body, particularly as distinct from the mind or psyche, often used in the context of bodily symptoms or sensations.