A Conclusion of the Theory of Rational Expectations Is That

question 42

Multiple Choice

A conclusion of the theory of rational expectations is that, in the short run, the impact of discretionary fiscal policies designed to shift the AD curve will:

• A)​result in no net change in AD once people's expectations adjustments have been accounted for.
• B)​shift AD in the opposite direction intended once people's expectations adjustments have been accounted for.
• C)​be anticipated and compensated for, causing no significant effect on real GDP or employment if people's anticipations are correct.
• D)​have to be anticipated to change real output in the intended direction.

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Definitions:

Load Smoothing

A strategy to balance workload or production levels to minimize peaks and troughs, ensuring consistent use of resources over time.

Bill of Material

An all-encompassing register of foundational materials, pieces, and recipes necessary for erecting, generating, or fixing a product or service.

Lead Time

The time interval from initiating a process to its completion, often critical in manufacturing, supply chain management, and project planning.

Final Assembly

The last step in the manufacturing process where components are put together to complete the finished product.