The Lucas Supply Function, in Combination with the Assumption That

Multiple Choice

The Lucas supply function, in combination with the assumption that expectations are rational, implies that if a monetary policy change is announced to the public,

A) the change in real output will be positive.
B) the change in real output will be negative.
C) there will be no change in real output.
D) Both A and B are possible, depending on they type of monetary policy change that has been announced.