New Classical Economists Believe That If Policy Is Correctly Anticipated

question 30

Multiple Choice

New classical economists believe that if policy is correctly anticipated and if rational expectations hold,when the Fed increases the money supply the result will be a(n) ______________ in the price level and ____________________________.

• A) decrease; no change in Real GDP
• B) decrease; decrease in Real GDP
• C) increase; no change in Real GDP
• D) increase; increase in Real GDP

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Definitions:

Sample Proportion

The fraction or percentage of the sample that exhibits a particular property or attribute.

Parameter

A numerical characteristic of a population, such as its mean or variance, which is typically unknown and estimated from sample data.

Binomial Distributions

A type of probability distribution that describes the number of successes in a fixed number of binary (yes/no) experiments.

Discrete Random Variables

Variables in statistics that can take on a countable number of distinct values and are not continuous.