Which Statement Is True When Rational Expectations Exist and There

question 199

Multiple Choice

Which statement is true when rational expectations exist and there is a change in monetary policy which is unexpected?

• A) The change in monetary policy leads to a change in aggregate demand that leads to a temporary short-run equilibrium that is different from the long-run equilibrium.
• B) The change in monetary policy leads to a simultaneous shift of the short-run aggregate supply curve.
• C) The change in monetary policy lead to a simultaneous shift in the long-run aggregate supply curve.
• D) The change in monetary policy does not change equilibrium in either the short-run or long-run.

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Definitions:

Adventitia

The outermost layer of the wall of a blood vessel or other tubular structure, consisting of connective tissue.

Cortex

The outer layer of an organ or structure, such as the cerebral cortex of the brain or the cortex of a plant root or stem.

Medulla

The innermost part of an organ or structure, such as the medulla oblongata in the brain which controls vital body functions.

Renal Papilla

The tip of the renal pyramid in the kidney that projects into the minor calyx, where urine is collected before passing into the ureter.