Believers in the Hypothesis of Rational Expectations Argue That

question 74

Multiple Choice

Believers in the hypothesis of rational expectations argue that:

• A)​expansionary fiscal and monetary policy can reduce unemployment without creating inflation.
• B)​a trade-off exists between unemployment and inflation even in the long run.
• C)​the Phillips curve is vertical even in the short run for expected changes in inflation.
• D)​the Phillips curve is downward sloping even in the long run.

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Definitions:

Synapse

The junction between two neurons or between a neuron and muscle fiber, where electrical or chemical signals are transmitted.

All-or-none Law

A principle stating that the strength of a response of a nerve or muscle fiber is not dependent on the strength of the stimulus. If a stimulus is above a certain threshold, a nerve or muscle fiber will fire.

Physiological Explanation

Physiological explanation involves interpreting behaviors, functions, or responses in terms of the biological processes and structures underlying them.

Mechanisms

Refer to the structured processes or techniques that lead to a particular outcome or are used in the operation of something.