Under the Rational Expectations Hypothesis, If Wages Adjust Rapidly to New

question 276

Multiple Choice

Under the rational expectations hypothesis, if wages adjust rapidly to new information about intended policy actions, the only time that changes in government policies have real effects is when

• A) the changes are unanticipated.
• B) the changes involve fiscal policy.
• C) the changes involve monetary policy.
• D) the changes affect aggregate demand.

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Definitions:

Behavioral Approach

A focus on observable behaviors and ways to improve them through conditioning and reinforcement.

Leader's Style

The characteristic manner in which a leader guides, influences, or directs a group, including approaches such as authoritative, democratic, or laissez-faire.

Task Behavior

The extent to which leaders are likely to organize and define the roles of their followers, aiming to establish clear paths to goal achievement.

Group Cohesiveness

The extent to which members of a group support and validate one another and remain loyal to the group.