According to the Rational Expectations School, What Will Be the Effect

question 69

Multiple Choice

According to the rational expectations school, what will be the effect of a correctly anticipated expansionary monetary policy?  

• A) Real output will increase in the short run only. 
• B) Prices and real output will remain the same. 
• C) Prices will decrease and real output will decrease. 
• D) A movement toward a higher price level will occur.

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