A Conclusion of the Theory of Rational Expectations Is That

question 42

Multiple Choice

A conclusion of the theory of rational expectations is that, in the short run, the impact of discretionary fiscal policies designed to shift the AD curve will:

• A)​result in no net change in AD once people's expectations adjustments have been accounted for.
• B)​shift AD in the opposite direction intended once people's expectations adjustments have been accounted for.
• C)​be anticipated and compensated for, causing no significant effect on real GDP or employment if people's anticipations are correct.
• D)​have to be anticipated to change real output in the intended direction.

---

Definitions:

Dual Control Model

A theoretical perspective of sexual response based on brain function and the interaction between sexual excitation and sexual inhibition.

Sexual Inhibition

A psychological or physiological process that limits or suppresses sexual desire, behavior, or response.

Sexual Excitation

refers to the state of heightened arousal and increased sexual desire often in response to stimuli.