Statement I: According to the Rational Expectations Theory,the Prime Economic

question 125

Multiple Choice

Statement I: According to the rational expectations theory,the prime economic mover is aggregate demand,not aggregate supply.
Statement II: The rational expectationists believed that the oil price shocks of 1973 and 1979 created declines in aggregate supply,lowering the natural level of GDP.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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