Which of the Following Statements Is Not Consistent with the Theory

question 67

Multiple Choice

Which of the following statements is not consistent with the theory of rational expectations?

• A) The Phillips curve is vertical.
• B) Expansionary fiscal policy that is anticipated is ineffective even in the short run.
• C) The aggregate supply curve is vertical.
• D) People adjust slowly to changes in the inflation rate.
• E) A downward-sloping Phillips curve does not exist for expected changes.

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