If the Rational Expectation Theory Is Accurate, Equilibrium Real GDP

question 129

Multiple Choice

If the rational expectation theory is accurate, equilibrium real GDP will change in the short run:

• A)​whenever the aggregate demand curve shifts.
• B)​only if discretionary fiscal policy is used.
• C)​only if there is a shift in aggregate demand that could not have been predicted from the information available to the public.
• D)​only if discretionary monetary policy is used.

Analyze how changes in prices and income affect the demand for goods, taking into account the roles of perfect substitutes and complements.

Identify and distinguish between the Slutsky and Hicks versions of income and substitution effects.

Understand utility functions and how consumers maximize utility subject to budget constraints.

Explain the effects of price and income elasticity of demand on consumer purchasing behavior.

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Definitions:

Dentists

Healthcare professionals specializing in the diagnosis, prevention, and treatment of diseases and conditions of the oral cavity.

Blocking

A learning process where the presence of an established conditioned stimulus interferes with the learning of a new conditioned stimulus.

Salience

The quality of being particularly noticeable or important; the state or condition by which something stands out from its surroundings or background in perception.

Behavioral Contrast

A phenomenon in which the rate of response varies according to a change in the reinforcement of an alternative behavior.