In the Rational Expectations Model, Government Control Over Aggregate Demand

question 67

Multiple Choice

In the rational expectations model, government control over aggregate demand

• A)can affect real output only if policies are unexpected.
• B)has potential to change real output as long as aggregate supply is vertical.
• C)gives it the ability to change real output and employment.
• D)does not influence the economic behavior of individuals.

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Definitions:

Local Bakery

A nearby place that specializes in baking and selling bread, pastries, cakes, and other baked goods.

Long-Run Adjustment

Economic processes or actions that firms take over time to adjust to market conditions, including changes in production capacity or entering and exiting markets.

Foreign Competition

The competitive pressure that domestic companies face from products and services offered by foreign entities in the same market.

Branch Plants

Secondary factories or operations set up by a company away from its main premises, often in different geographical locations.