According to the theory of rational expectations, expansionary fiscal policy that is anticipated will:
a. cause wage expectations to adjust downward immediately following the lower price level.
b. increase the real wage rate in the long run.
c. cause a permanent decline in the natural rate of unemployment.
d. decrease the real wage rate in the long run.
e. cause wage expectations to adjust upward immediately following the higher price level.
Question 2
Using the midpoint method for calculating the price elasticity of demand, you get the same elasticity of demand between two points, whether you are moving up the demand curve or down it.
a. True
b. False
Indicate whether the statement is true or false
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