If Rational Expectations Theory Is Correct, Then Any Increase in Aggregate

question 200

Multiple Choice

If rational expectations theory is correct, then any increase in aggregate demand caused by announced expansionary policies

• A) leads to a short-run increase in real output but no long-run increase.
• B) causes the inflation rate to fall.
• C) is offset by rising inflationary expectations, causing the short-run aggregate supply curve to immediately shift to the left.
• D) is offset by rising inflationary expectations, causing the short-run aggregate supply curve to slowly shift to the left.

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Definitions:

Notice Of Dishonor

A formal notification indicating that a negotiable instrument, like a check, has been dishonored or refused for payment.

Revised Article 3

Part of the Uniform Commercial Code that governs negotiable instruments, such as checks and promissory notes, incorporating updates to reflect modern practices.

UCC

The Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States, intended to standardize and simplify the law across state lines.

Authorized Agent

An individual or entity that has been given the legal authority to act on behalf of another person or entity in business transactions or other matters.