Author Question: According to the theory of rational expectations, a. workers' experience tells them that government ... (Read 221 times)

HCHenry · **on:** Jun 30, 2018

According to the theory of rational expectations,
a. workers' experience tells them that government action to lower unemployment will not affect inflation.
b. consumers and investors generally behave so that rationally formed government attempts to stimulate aggregate demand have their desired effects.
c. policy goals can be achieved easily in the short run.
d. workers' wage demands include anticipated inflation.
e. expansionary monetary policy will lead to permanent interest rate declines.

Question 2

If the inflation rate exceeds the nominal rate of interest,
a. the real interest rate is negative.
b. lenders lose.
c. savers lose.
d. all of these.