Multiple Choice
Within the aggregate demand-aggregate supply framework, a strict interpretation of rational expectations theory suggests that a change in aggregate
A) demand will have a large effect on the price level but a small effect on output.
B) demand will have a small effect on the price level but a large effect on output.
C) demand will have a large effect on the price level but no effect on output.
D) supply will have a large effect on the price level but no effect on output.
Correct Answer:
Verified
Correct Answer:
Verified
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