Under the Assumption of Rational Expectations, Fiscal and Monetary Policy

question 61

Multiple Choice

Under the assumption of rational expectations, fiscal and monetary policy changes are effective in the short run

• A) all of the time.
• B) only when the short-run aggregate supply curve is the same as the long-run aggregate supply curve.
• C) only when the policy changes leave the position of the aggregate demand curve unaffected.
• D) only when the policy changes are unanticipated.

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Definitions:

Activator

A substance that increases the rate of a chemical reaction without being consumed, often by lowering the activation energy.

Major Organic Product

The primary product resulting from the majority pathway of an organic reaction.

Benzene

An aromatic hydrocarbon with a ring of six carbon atoms bonded together in a planar hexagonal ring with alternating single and double bonds.

Bromination

A chemical reaction involving the addition or substitution of bromine to an organic compound, often used in synthesis.