According to the Rational Expectations Theory,monetary Policy Is Fully Anticipated

question 53

Multiple Choice

According to the rational expectations theory,monetary policy is fully anticipated and therefore only affects:

• A)the level of real GDP.
• B)t​he level of real investment.
• C)the price level.
• D)the level of real consumption.
• E)the level of exports.

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Definitions:

Operating Cash Inflow

Cash received by a company during its normal business operations.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value, taking into account the effects of taxes.

Straight-Line Depreciation

A method of calculating depreciation of an asset by evenly spreading its cost over the expected useful life.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value after accounting for the effects of taxes, reflecting the net cost of capital to the company.