Which Statement Is TRUE When Rational Expectations Exist and There

question 191

Multiple Choice

Which statement is TRUE when rational expectations exist and there is a change in monetary policy which is unexpected?

• A) The change in monetary policy leads to a change in aggregate demand that leads to a temporary short-run equilibrium that is different from the long-run equilibrium.
• B) The change in monetary policy leads to a simultaneous shift of the short-run aggregate supply curve.
• C) The change in monetary policy lead to a simultaneous shift in the long-run aggregate supply curve.
• D) The change in monetary policy does not change equilibrium in either the short-run or long-run.

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