A Macroeconomic Policy Action Will Have a Longer-Term Effect on Aggregate

question 262

Multiple Choice

A macroeconomic policy action will have a longer-term effect on aggregate demand if people

• A) have rational expectations.
• B) have habit formation in consumption.
• C) have rational inattention.
• D) update the way they make decisions frequently.

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Definitions:

Military Aircraft

Aircrafts designed for use in warfare, including fighters, bombers, and transport planes.

GDP Deflator

A gauge for assessing the price rates of all new, locally manufactured, end goods and services in a country, applied to recalibrate nominal GDP to real GDP.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), providing a more accurate reflection of an economy's size and how it’s growing over time.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to convert nominal GDP into real GDP.