This topic contains a solution. Click here to go to the answer

Author Question: If rational expectations hold, aggregate demand policy actions only affect output if a. they are ... (Read 117 times)

appyboo

  • Hero Member
  • *****
  • Posts: 527
If rational expectations hold, aggregate demand policy actions only affect output if
 
  a. they are predictable.
  b. they are unpredictable.
  c. they are systematic.
  d. they are permanent.
  e. both b and d.

Question 2

Unprecedented stimulative policies throughout the global economy have sparked debate over the inflationary implications. Defenders of the policies argue that, even if the policies raise inflationary expectations, actual inflation will remain low.
 
  Critics charge that current policies are nearly certain to result in excessive inflation. What does the aggregate supply curve have to say?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

C.mcnichol98

  • Sr. Member
  • ****
  • Posts: 314
Answer to Question 1

B

Answer to Question 2

As long as the negative output gap persists, rising expectations of inflation will not translate into much actual inflation. However, if the output gap shrinks in absolute value as policy makers intend, nothing will insulate inflation from expectations. To avoid the critics' prediction of excessive inflation, policy makers must somehow manage expectations (and avoid allowing a positive output gap from emerging).




appyboo

  • Member
  • Posts: 527
Reply 2 on: Jun 30, 2018
:D TYSM


kalskdjl1212

  • Member
  • Posts: 353
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

There are more sensory neurons in the tongue than in any other part of the body.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

Most strokes are caused when blood clots move to a blood vessel in the brain and block blood flow to that area. Thrombolytic therapy can be used to dissolve the clot quickly. If given within 3 hours of the first stroke symptoms, this therapy can help limit stroke damage and disability.

Did you know?

Green tea is able to stop the scent of garlic or onion from causing bad breath.

For a complete list of videos, visit our video library