Rational Expectation Theory Implies That Accurately Anticipated Change in Aggregate

question 69

Multiple Choice

Rational expectation theory implies that accurately anticipated change in aggregate demand:

• A)​will increase RGDP in the short run.
• B)​will affect RGDP and inflation only in the long run.
• C)​may affect RGDP but not nominal GDP in the short run.
• D)​will do none of the above.

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Definitions:

Selling Price

The amount of money for which a product or service is sold to the customer.

Principal

An individual or entity that authorizes an agent to act on their behalf in legal or financial matters.

NPV Criterion

A financial metric used to assess the profitability of an investment, calculating the net present value of all cash flows associated with it.

Future Cash Flows

Estimates of the amount of money expected to be received or paid out in the future through investment, business operations, or other financial activities.