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 110 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
Gracias!


adammoses97

  • Member
  • Posts: 337
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

Most childhood vaccines are 90–99% effective in preventing disease. Side effects are rarely serious.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

Fungal nail infections account for up to 30% of all skin infections. They affect 5% of the general population—mostly people over the age of 70.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

For a complete list of videos, visit our video library