According to the Rational Expectation View, Does the Government Have

question 77

Multiple Choice

According to the rational expectation view, does the government have the ability to control the level of real output and unemployment?

• A)​Only in the SR and only if it makes unexpected changes in aggregate demand.
• B)​Only in the SR and only if it announces plans well in advance, so that expectations are affected.
• C)​Only in the LR and only if it shifts AS instead of AD.
• D)​Only in the LR and only if it uses monetary policy instead of fiscal policy.

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Definitions:

Free Will

The concept that human beings have the power to make choices that are not determined by natural or divine forces.

Self-Actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.

Esteem Needs

According to Maslow's hierarchy of needs, these are the needs for self-esteem, strength, competence, mastery, self-confidence, independence, and freedom.

Higher Needs

Refers to the more advanced stages in Maslow's hierarchy of needs, including esteem and self-actualization needs, beyond basic physiological and safety needs.