A Conclusion of the Theory of Rational Expectations Is That

question 102

Multiple Choice

A conclusion of the theory of rational expectations is that the impact of discretionary fiscal policies designed to shift the aggregate demand curve will

• A)result in no net change in aggregate demand.
• B)be anticipated and compensated for,causing no significant change in real GDP or employment levels.
• C)be completely opposite of the intended result.
• D)be incorrectly evaluated by most economists.
• E)cause potential GDP to increase.

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Definitions:

Societal Environmental Cost

A cost associated with environmental degradation or improvement, borne by society as a whole due to economic activities.

Oil-Spill Clean Up

Refers to the methods and technologies used to remove or mitigate the impacts of oil spills in the environment, often involving mechanical, biological, and chemical techniques.

Product Disposal

The process of safely getting rid of excess, obsolete, or defective goods in a manner that adheres to environmental and legal standards.

Conventional Environmental Cost

Expenses related to the damage or depletion of natural resources, waste management, and environmental compliance traditionally recognized by businesses.