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 118 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!


ultraflyy23

  • Member
  • Posts: 312
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

Cytomegalovirus affects nearly the same amount of newborns every year as Down syndrome.

Did you know?

Warfarin was developed as a consequence of the study of a strange bleeding disorder that suddenly occurred in cattle on the northern prairies of the United States in the early 1900s.

Did you know?

For about 100 years, scientists thought that peptic ulcers were caused by stress, spicy food, and alcohol. Later, researchers added stomach acid to the list of causes and began treating ulcers with antacids. Now it is known that peptic ulcers are predominantly caused by Helicobacter pylori, a spiral-shaped bacterium that normally exist in the stomach.

Did you know?

Common abbreviations that cause medication errors include U (unit), mg (milligram), QD (every day), SC (subcutaneous), TIW (three times per week), D/C (discharge or discontinue), HS (at bedtime or "hours of sleep"), cc (cubic centimeters), and AU (each ear).

Did you know?

The modern decimal position system was the invention of the Hindus (around 800 AD), involving the placing of numerals to indicate their value (units, tens, hundreds, and so on).

For a complete list of videos, visit our video library