Studying Alternative Theories of How People Form Expectations Is Particularly

question 113

Multiple Choice

Studying alternative theories of how people form expectations is particularly relevant to monetary policy because:

• A) if people fully expect inflation to occur, the effects of monetary policy are more widespread.
• B) monetary policy can only have real effects on the economy if people fully expect inflation.
• C) unexpected inflation cause prices to be flexible.
• D) the effects of expected inflation are completely different from the effects of unexpected inflation.
• E) expected inflation cause prices to become sticky.

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Definitions:

Cardiovascular Disease

A class of diseases that involve the heart or blood vessels, such as coronary artery disease, hypertension, heart attack, and stroke.

Modifiable Lifestyle Factors

Aspects of a person's lifestyle that can be changed to improve health, such as diet, exercise, and smoking habits.

Type A Personality

A personality trait characterized by high levels of competitiveness, self-imposed stress, and a constant sense of urgency.

Cardiovascular Disease

A general term for conditions affecting the heart and blood vessels, often related to atherosclerosis or the buildup of plaques within arteries.