Which of the following macroeconomic variables is most dependent on whether the government pursues an active approach to policy or a passive approach to policy?
a. Aggregate supply
b. Aggregate demand
c. Money demand
d. Money supply
e. Interest rate
Question 2
According to the rational expectations school, _____.
a. on average people have very little idea of what to expect from government policy makers
b. people form expectations by focusing only on the private sector
c. changes in the expected price level shift the aggregate demand curve
d. people do not consider likely government policies when forming expectations, choosing to remain rationally ignorant
e. people form expectations, in part, by considering the probable future actions of government policy makers
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