One Implication of Coupling the Rational Expectations Hypothesis with the Assumption

question 273

Multiple Choice

One implication of coupling the rational expectations hypothesis with the assumption of flexible wages and prices is that

• A) expansionary monetary policy will be effective in combating recessions.
• B) contractionary monetary policy will be effective in combating inflation.
• C) only predictable policy actions by the Fed will have an effect on the real economy.
• D) only unpredictable policy actions by the Fed will have an effect on the real economy.

---

Definitions:

Endometrium

The innermost layer of the uterus. It undergoes significant changes during the menstrual cycle.

Ovarian Cysts

Fluid-filled sacs that form on the surface of an ovary or within it, often harmless and presenting few symptoms but sometimes requiring medical attention.

External Genitalia

The external organs of the reproductive system, including the penis, scrotum, vulva, and labia, visible on the body's exterior.

Reproductive Organs

The organs and structures in the body involved in reproduction, including the testes in males and ovaries in females, among others.