The Integration of Expectations into Macroeconomic Analysis Indicates That

question 167

Multiple Choice

The integration of expectations into macroeconomic analysis indicates that

• A) fiscal policy is more potent than monetary policy.
• B) monetary policy is more potent than fiscal policy.
• C) once people come to expect a given rate of inflation, the inflation will neither stimulate real output nor reduce unemployment.
• D) higher rates of inflation will lead to lower rates of unemployment in the long run but not in the short run.

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Definitions:

Credit Side

The right side of an accounting entry, indicating increases in liabilities, revenues, and equity, and decreases in assets and expenses.

Normal Balance

The side (debit or credit) on which increases to an account are recorded, depending on the type of account.

Liability Account

An accounting record that represents a company's legal debts or obligations that arise during the course of business operations.

Revenue Account

An account that tracks the income generated from a company's primary operations.