A Conclusion of the Theory of Rational Expectations Is That

question 118

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:

Dilantin

A brand name for phenytoin, a medication used to control seizures by slowing down impulses in the brain that cause seizures.

Depakene

A brand name for valproic acid, a medication used to treat seizures, bipolar disorder, and to prevent migraine headaches.

Transient Ischemic Attack

A temporary blockage of blood flow to the brain, often called a mini-stroke, that causes short-lived symptoms similar to a stroke.

Ministroke

Also known as a Transient Ischemic Attack (TIA), it refers to a brief interruption of blood supply to part of the brain, causing temporary stroke-like symptoms.