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:

Income Elasticity of Demand

A metric that gauges the sensitivity of demand for a product to shifts in the income of consumers.

Weekly Income

The total amount of earnings received by an individual or entity over the span of a week.

Bars of Chocolate

Solid blocks of chocolate that can vary in cocoa content, sweetness, and added ingredients, enjoyed as confectionary treats.

Change in Income

The variation, either increase or decrease, in the amount of money earned by individuals or households over time.