Under the Adaptive Expectations Hypothesis, How Will a Shift to a More

question 14

Multiple Choice

Under the adaptive expectations hypothesis, how will a shift to a more expansionary monetary policy affect the economy?

• 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 real rate of output will increase, but in the long run, it will be unchanged.
• 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:

Type C Personality

A personality style characterized by difficulty expressing emotions, a high level of detail orientation, and a tendency towards introversion.

Counterdependent Personality

A personality trait characterized by a strong resistance to depending on others or forming close relationships, often as a defensive mechanism.

Transformational Coping

A method of managing stress and psychological strain by altering one’s perspective on the stressor, often resulting in personal growth or change.

Perception

The cognitive process that enables us to interpret and understand our surroundings through the sensory data we receive from the environment.