According to the Rational Expectations School,if the Fed Announces a Policy

question 101

Multiple Choice

According to the rational expectations school,if the Fed announces a policy of rapid growth in the money supply,but then puts the brakes on money expansion without any announcement,the short-run result is likely to be

• A)an unexpected surge in aggregate demand
• B)an unexpected drop in aggregate demand
• C)an anticipated surge in aggregate demand
• D)an anticipated drop in aggregate demand
• E)no change in aggregate demand

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Definitions:

Initial Value Method

An accounting approach where investments are recorded at their purchase cost without subsequent adjustments for changes in market value.

Intra-entity Gross Profit

The gross profit resulting from transactions within the same company or between parent and subsidiary companies, which may need to be eliminated in consolidated financial statements.

Consolidation Worksheet

A tool used in preparation of consolidated financial statements that helps combine the financials of a parent company and its subsidiaries.

Goodwill

An intangible asset on a company's balance sheet representing the premium paid over the book value of the assets acquired in a merger or acquisition.