Multiple Choice
According to the rational expectations school, if the Fed announces a policy of rapid growth in the money supply, but then puts the brakes on money expansion without any announcement, which of the following is likely to be the short-run result?
A) an unexpected surge in aggregate demand
B) an unexpected drop in aggregate demand
C) an anticipated surge in aggregate demand
D) an anticipated drop in aggregate demand
E) no change in aggregate demand
Correct Answer:
Verified
Correct Answer:
Verified
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