In the Rational Expectation Model, Government Control Over Aggregate Demand

question 132

Multiple Choice

In the rational expectation model, government control over aggregate demand:

• A)​gives it the power to alter real output and employment even when the effects of government policies are expected.
• B)​can affect real output in the short-run only if policies are unexpected.
• C)​has potential to change long-run real output as long as the aggregate supply curve is vertical.
• D)​has highly unpredictable effects on real output in the long run.

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