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:

Demand-Backward Pricing

A pricing strategy where the starting point is the consumer's desired price, and costs are worked backward to determine if a product can be profitably produced.

Target Pricing

A pricing method in which the selling price of a product is calculated to produce a particular return on investment for a specific volume of production.

Bundle Pricing

A marketing strategy where multiple products or services are packaged together and sold at a single price, often for a discount.

Penetration

A measure of the extent to which a product, service, or brand has been adopted by customers within a particular market.