The Lucas Supply Model, in Combination with the Assumption That

question 84

Multiple Choice

The Lucas supply model, in combination with the assumption that expectations are rational, leads to the conclusion that

• A) expansionary policies, but not contractionary policies, can have an impact on real output.
• B) contractionary policies, but not expansionary policies, can have an impact on real output.
• C) only unanticipated policy changes can have an impact on output.
• D) neither anticipated nor unanticipated policy changes can have an impact on output.

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Definitions:

Operating Segments

Components of a business that engage in business activities earning revenues and incurring expenses, whose operating results are regularly reviewed by the company's decision maker.

Revenues

The total amount of income generated by the sale of goods or services related to a company's primary operations before any costs or expenses are deducted.

Operating Segments

Operating segments refer to components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Identifying Factors

Elements or characteristics that can be used to recognize, classify, or differentiate between different subjects or objects.