The Rational Expectations Hypothesis Indicates That a Monetary Policy Designed

question 257

Multiple Choice

The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless

• A) there are unanticipated changes in the money supply.
• B) wages and prices are flexible.
• C) labor unions have long-term contracts.
• D) changes in the money supply are completely anticipated.

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Definitions:

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