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:

Monthly Rates

Periodical figures or charges allocated on a per-month basis, common in services and financial agreements.

Pounds

A unit of weight in the Imperial system, equivalent to 0.453592 kilograms.

Compute

To calculate or process data using a computer or mathematical algorithms.

Weight

A measure of the heaviness of an object, typically defined by the force of gravity on it.