A Conclusion of the Theory of Rational Expectations Is That

question 93

Multiple Choice

A conclusion of the theory of rational expectations is that, in the short run, the impact of discretionary fiscal policies designed to shift the AD curve will:

• A)​result in no net change in AD once people's expectations adjustments have been accounted for.
• B)​shift AD in the opposite direction intended once people's expectations adjustments have been accounted for.
• C)​be anticipated and compensated for, causing no significant effect on real or nominal GDP or employment.
• D)​have to be a surprise to change real output in the intended direction.

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Definitions:

Inverse Time-Delay

Refers to a characteristic of protective devices where the time to trip decreases as the magnitude of the current increases.

Overload Current

The flow of electricity exceeding the normal operating current, potentially causing overheating or damage to electrical components.

Overload Units

Devices or mechanisms designed to protect electrical circuits and motors from operating above their rated capacity, preventing damage.

Thermal Overload Units

Devices designed to protect motors and circuits from overheating due to excessive current or overload conditions.