With Rational Expectations, a Policy That Would Decrease AD Would

question 7

Multiple Choice

With rational expectations, a policy that would decrease AD would certainly lead to:

• A)​higher inflation and lower unemployment in the short run.
• B)​lower inflation and higher unemployment in the short run.
• C)​higher inflation and no change in unemployment in the short run, if people's expectations were correct.
• D)​none of the above.

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Definitions:

ICANN

The Internet Corporation for Assigned Names and Numbers, a nonprofit organization responsible for coordinating the maintenance and procedures of several databases related to the namespaces of the Internet.

NWICO

An acronym for the New World Information and Communication Order, a movement promoting global equity in the dissemination and flow of information.

League of Nations

An intergovernmental organization founded in 1920 to promote world peace and cooperation, but was eventually replaced by the United Nations.

Dissemination of Information

The process of distributing knowledge or data to a wide audience through various means, including electronic and print media.