Under Adaptive Expectations, the Short-Term Effect of an Unanticipated Shift

question 57

Multiple Choice

Under adaptive expectations, the short-term effect of an unanticipated shift to a more expansionary macroeconomic policy will be a

• A) temporary reduction in the unemployment rate.
• B) permanent reduction in the unemployment rate.
• C) temporary reduction in the inflation rate.
• D) permanent reduction in the inflation rate.

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Definitions:

Testable Hypotheses

A proposition that can be put to a practical test to determine its validity.

Relative Risk

A measure in epidemiology that indicates the likelihood of a certain event or disease occurring in one group compared to another.

Mortality

The state of being subject to death; often used in statistics to refer to the rate of death in a population.

Psychometric Testing

The scientific measurement of individuals' mental capabilities and behavioral style, primarily through standardized psychological assessments.