Under the Rational Expectations Hypothesis, Which of the Following Is

question 109

Multiple Choice

Under the rational expectations hypothesis, which of the following is the most likely short-run effect of a move to expansionary monetary policy?

• A)A higher general level of prices but no change in real output
• B)A higher general level of prices and an expansion in real output
• C)No change in the general level of prices and a reduction in real output
• D)No change in either the general level of prices or real output

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Definitions:

Chomsky

Noam Chomsky, a prominent figure in linguistics and cognitive science, known for his theory of universal grammar and criticism of behaviorism.

Behaviourist

A psychologist or researcher who studies behavioral patterns, often focusing on measurable and observable actions rather than mental or emotional states.

Nativist

A perspective in the field of linguistics and cognitive science which suggests that the ability to acquire language is innate to humans and genetically predetermined.

Cognitive

Relating to cognition, which involves processes such as thinking, knowing, remembering, judging, and problem-solving.