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With Rational Expectations, a Correctly Anticipated Policy That Would Increase

Question 89

Multiple Choice

With rational expectations, a correctly anticipated policy that would increase AD would lead to:


A) ​higher inflation and lower unemployment in the short run.
B) ​higher inflation and higher unemployment in the short run.
C) ​higher inflation and no change in unemployment in the short run.
D) ​lower inflation and lower unemployment in the short run.

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