If the Rational Expectation Theory Is Accurate, Equilibrium Real GDP

question 129

Multiple Choice

If the rational expectation theory is accurate, equilibrium real GDP will change in the short run:

• A)​whenever the aggregate demand curve shifts.
• B)​only if discretionary fiscal policy is used.
• C)​only if there is a shift in aggregate demand that could not have been predicted from the information available to the public.
• D)​only if discretionary monetary policy is used.

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Definitions:

Formal Operations

A stage in Piaget's theory of cognitive development where individuals gain the ability to think abstractly and logically.

Systematically

In a methodical and organized manner, often involving a clear, step-by-step procedure.

Concrete Operations

Piaget’s term for coordinated mental actions that allow children to mentally combine, separate, order, and transform concrete objects and events that the children experience directly.

Formal Operational Thinking

A stage of cognitive development in Piaget's theory, where individuals gain the ability to think abstractly, reason logically, and organize thoughts coherently.