Author Question: Brandon, an economist, is a believer of the rational expectations school. According to him, which of ... (Read 41 times)

lindiwe · **on:** Jun 30, 2018

Brandon, an economist, is a believer of the rational expectations school. According to him, which of the following is likely to affect the levels of output and employment in an economy?
a. An expansionary monetary policy, if it is fully anticipated
b. A recessionary monetary policy, if it is fully anticipated
c. A monetary policy that is unanticipated
d. A fiscal policy that is anticipated
e. The Fed's announcement of no change in monetary policy

Question 2

Economists of the rational expectations school believe that expansionary monetary policy is fully effective only if:
a. the policy is anticipated by workers and firms.
b. it causes the aggregate supply curve to shift to the left.
c. the economy is operating at or above its potential output level.
d. policy makers follow through on their previously announced plans.
e. the policy is totally unexpected.