If Expectations Are Rational, Can Monetary and Fiscal Policy Makers

question 34

Multiple Choice

If expectations are rational, can monetary and fiscal policy makers accurately control the effects their policies have on unemployment?

• A)​Yes, provided they announce policies in advance.
• B)​Yes, both policies are effective in altering unemployment in the desired ways.
• C)​No, because these effects depend on whether and to what extent people are fooled by those policies.
• D)​No, only fiscal policy can alter unemployment.

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Definitions:

Economies Of Scope

Describes cost advantages that businesses experience when they increase the variety of goods or services they offer, utilizing shared operations or resources.

Economies Of Scope

Cost advantages that enterprises obtain due to a larger scope of operations, where producing a wider variety of goods or services results in lower average costs.

Economies Of Scope

Cost advantages that result from a firm's ability to produce multiple products more efficiently together than separately.

Seasonal Demand

Fluctuations in the demand for certain products or services that occur at specific times of the year.