If Expectations Are Formed Rationally,wages and Prices Are Not Completely

question 138

Multiple Choice

If expectations are formed rationally,wages and prices are not completely flexible in the short run,and policy is correctly anticipated,increases in aggregate demand will stimulate the economy to higher levels of Real GDP and lower levels of unemployment 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 in not the short run.

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Definitions:

Classically Conditioned

The process by which a neutral stimulus becomes associated with an innately meaningful stimulus and acquires the capacity to evoke a similar response.

Observational Learning

Learning that occurs through observing the behavior of others and the outcomes of those behaviors.

Conditioned Response

A learned response to a previously neutral stimulus that becomes conditioned after being associated with an unconditioned stimulus.

Unconditioned Stimulus

Within classical conditioning, a stimulus that inherently and automatically elicits a response without any previous training.