In the Rational Expectations View

question 16

Multiple Choice

In the rational expectations view:

• A) Wages are flexible downward but prices are inflexible downward
• B) Prices are flexible downward but wages are inflexible downward
• C) Discretionary policy tends to be countercyclical
• D) Discretionary policy tends to be ineffective

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Definitions:

Psychological Influences

Factors that affect mental processes and behavior, including emotions, attitudes, thoughts, and social dynamics.

Endocrine System

A collection of glands that produce hormones regulating metabolism, growth and development, tissue function, sexual function, reproduction, sleep, and mood, among other things.

Body Tissues

Groups of similar cells that perform specific functions within an organism, including muscle, nerve, epithelial, and connective tissues.

HPA Axis

The hypothalamic-pituitary-adrenal axis, a complex system of interactions between three endocrine glands, central to the body's response to stress.