The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless
A) changes in the money supply are completely anticipated.
B) labor unions have long-term contracts.
C) the government's budget is not in deficit.
D) changes in the money supply are unexpected.
Question 2
If the opportunity cost of entrepreneurship increases:
A) the aggregate demand in the economy increases.
B) the number of entrepreneurs in the economy will increase.
C) the price level in the economy falls.
D) the aggregate output of the economy will decrease.
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