If People Have Rational Expectations and Correctly Estimate the Effects

question 126

Multiple Choice

If people have rational expectations and correctly estimate the effects of a change in government policy, when the economy is initially at full employment, any anticipated increase in aggregate demand will result in:

• A)​a decrease in both aggregate demand and short-run aggregate supply.
• B)​an increase in short-run aggregate supply that will maintain full employment.
• C)​higher prices that will reduce aggregate demand to its original level.
• D)​a decrease in short-run aggregate supply that will maintain full employment.

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Definitions:

Growth Spurt

A rapid period of growth in physical stature, typically occurring during puberty in adolescents.

PISA

An international study known as the Programme for International Student Assessment, which evaluates educational systems worldwide by testing the skills and knowledge of 15-year-old students.

Educational Practices

The methods and strategies used in teaching to enhance learning.

Spermarche

The first occurrence of ejaculation in males, marking a significant milestone in male puberty.