Rational Expectations Theory Implies That the More Completely the Effects

question 136

True/False

Rational expectations theory implies that the more completely the effects of policy makers are foreseen, the smaller their short run effects on real output and unemployment, and the greater their short run effects on the price level.

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Definitions:

Paradoxical

Characterized by seemingly contradictory qualities that may nevertheless be true when observed from different perspectives.

Human Nature

The natural traits, encompassing modes of thought, emotion, and behavior, presumed to be common among all humans.

Aggression

Behavior aimed at causing harm or pain to others, which can be physical or verbal, and motivated by various factors including anger or frustration.

Life Instincts

The drive for ensuring survival of the individual and the species by satisfying the needs for food, water, air, and sex.