According to the Theory Based on Rational Expectations and Flexible

question 113

Multiple Choice

According to the theory based on rational expectations and flexible wages and prices,

• A) fiscal policy has less effect on real GDP than monetary policy in the long run.
• B) monetary policy has less effect on real GDP than fiscal policy in the long run.
• C) neither fiscal nor monetary policy influence real GDP in the long run.
• D) only the combination of discretionary fiscal policy and conservative monetary policy can affect real GDP in the long run.

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Definitions:

William James

An American psychologist and philosopher considered one of the leading thinkers of the late 19th century, known for his works on pragmatism and functional psychology.

Psychological Questions

Inquiries designed to explore aspects of psychological states, processes, or phenomena, often pertaining to an individual's mental and emotional state.

Unconscious Thoughts

Thoughts and feelings that a person is not directly aware of but which influence behavior and emotions.

Wilhelm Wundt

Often regarded as the father of modern psychology, he established the first psychology laboratory at the University of Leipzig, Germany.