Under Adaptive Expectations,which of the Following Will Likely Be an Initial

question 146

Multiple Choice

Under adaptive expectations,which of the following will likely be an initial effect of an unanticipated shift to a more restrictive macroeconomic policy?

• A)a short-run decrease in output and a long-run decrease in inflation
• B)no change in output even in the short run,only a permanent decrease in inflation
• C)a short-run decrease in inflation and a long-run decrease in output
• D)lower inflation and lower output in the long run

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Definitions:

Total Utility

The total satisfaction or benefit a consumer receives from consuming a particular quantity of goods or services.

Indifference Curves

Graphical representations in microeconomics to illustrate a consumer's preference among different bundles of goods, where each point on the curve represents a combination of goods that provides the same level of utility to the consumer.

Indifference Curves

Curves that represent combinations of various goods or services that provide the same level of satisfaction to a consumer.

Normal Good

A good for which demand increases as the income of consumers increases, showing a direct relationship between income and demand.