If Expectations Are Formed Rationally,wages and Prices Are Completely Flexible

question 8

Multiple Choice

If expectations are formed rationally,wages and prices are completely flexible in both the short run and the long run,and policy is correctly anticipated,increases in aggregate demand will stimulate the economy to higher levels of Real GDP in

• A) the short run or the long run.
• B) neither the short run nor the long run.
• C) the short run,but not in the long run.
• D) the long run,but not in the short run.

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Definitions:

Outgoing

Characterized by an extroverted, sociable, and enthusiastic behavior toward others.

Conventional

Adhering to accepted standards and norms; traditional or typical in style or behavior.

Openness

A personality trait that involves the appreciation for new experiences, creativity, and a willingness to explore novel ideas.

Self-rating

An evaluative process in which individuals assess their own performance, characteristics, or conditions.