Studying Alternative Theories of How People Form Expectations Is Particularly

question 113

Multiple Choice

Studying alternative theories of how people form expectations is particularly relevant to monetary policy because:

• A) if people fully expect inflation to occur, the effects of monetary policy are more widespread.
• B) monetary policy can only have real effects on the economy if people fully expect inflation.
• C) unexpected inflation cause prices to be flexible.
• D) the effects of expected inflation are completely different from the effects of unexpected inflation.
• E) expected inflation cause prices to become sticky.

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Definitions:

Topic Sentence

A sentence that expresses the main idea of the paragraph in which it appears, usually found at the beginning.

Main Idea

The central or most important thought or message of a text, speech, or conversation, around which the content is developed.

Unified Paragraph

A paragraph in which all sentences and ideas contribute to a single main theme or argument.

Research Method

A systematic plan for conducting research, involving techniques and procedures for gathering, analyzing, and interpreting data.