With Rational Expectations, a Policy That Would Increase AD Would

question 27

Multiple Choice

With rational expectations, a policy that would increase AD would lead to:

• A)higher inflation and a higher real output in the long run if people's expectations were incorrect.
• B)higher inflation and a lower real output in the long run if people's expectations were incorrect.
• C)higher inflation and a higher real output in the short run if people's expectations were correct.
• D)higher inflation and no change in real output in the short run if people's expectations were correct in the short run.
• E)higher inflation and a lower real output in the short run if people's expectations were incorrect.

---

Definitions:

American Medical Association

The American Medical Association (AMA) is a professional organization for physicians in the United States, dedicated to promoting the art and science of medicine and the betterment of public health.

American Pharmacists Association

A professional organization representing pharmacists in the United States, focusing on improving medication use and advancing patient care.

American College of Physicians

A professional organization for internal medicine physicians aimed at promoting excellence and professionalism in the medical field.

American Association of Medical Assistants

A professional organization for medical assistants, providing certification, education, and networking opportunities.