According to the rational expectations approach , if policy makers consistently stimulate aggregate demand when real output falls below the economy's potential output, then people will not be able to anticipate the effects of this policy on the price level, unemployment, and the real output level.
a. True
b. False
Indicate whether the statement is true or false
Question 2
According to the rational expectations theory, people's predictions about the future course of governmental economic policy influence the position of the short-run aggregate supply curve.
a. True
b. False
Indicate whether the statement is true or false
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Math for Business and Finance: an Algebraic Approach, 3rd Edition Jeffrey Slater