A Conclusion of the Theory of Rational Expectations Is That

question 41

Multiple Choice

A conclusion of the theory of rational expectations is that, in the short run, the impact of a correctly anticipated fiscal policy designed to decrease AD 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)​decrease the price level.
• D)​result in no change in the price level.

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