According to the Rational Expectation View,does the Government Have the Ability

question 20

Multiple Choice

According to the rational expectation view,does the government have the ability to control the level of real output and unemployment?

• A) Only in the SR if it makes unexpected changes in aggregate demand.
• B) Only in the SR if it announces plans well in advance, so that expectations are affected.
• C) Only in the LR if it shifts AS instead of AD.
• D) Only in the LR if it uses monetary policy instead of fiscal policy.

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