According to the Theory of Rational Expectations, an Expected Increase

question 134

Multiple Choice

According to the theory of rational expectations, an expected increase in government spending would cause the aggregate supply curve

• A) to shift to the left at the same time that the aggregate demand curve shifts to the right.
• B) to shift to the left some time after the aggregate demand curve has shifted to the right.
• C) to shift to the right before the aggregate demand curve shifts to the right.
• D) not to shift at all.
• E) to shift to the right after the aggregate demand curve shifts.

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Definitions:

Germ

A microorganism, especially one that causes disease; commonly used to refer to pathogens or microbes.

Endosperm

The part of a seed that acts as a food store for the developing plant embryo, usually containing starch with protein and other nutrients.

Essential Nutrients

Nutrients necessary for normal body functioning that must be obtained from the diet; includes vitamins, minerals, amino acids, and fatty acids.

Chemical Reactions

Processes that involve the transformation of one set of chemical substances to another.