With rational expectations, a correctly anticipated policy that ...

[anjilletteb]

With rational expectations, a correctly anticipated policy that would increase AD would lead to:
 a. higher inflation and lower unemployment in the short run.
 b. higher inflation and higher unemployment in the short run.
 c. higher inflation and no change in unemployment in the short run.
  d. lower inflation and lower unemployment in the short run.

Question 2

Which of the following would be part of the Thai demand for U.S. dollars?
 a. A Thai street seller trying to sell a shirt to an American tourist
  b. A Thai bank selling dollars it possesses in exchange for euros
  c. An American exchanging dollars for Thai bahts that she will spend on her next vacation to Bangkok
  d. A Thai export company selling its products in the American markets
  e. A Thai importer who wants to buy a Caterpillar tractor

[peter]

Answer to Question 1

c

Answer to Question 2

e