Believers in the Hypothesis of Rational Expectations Argue That

Multiple Choice

Believers in the hypothesis of rational expectations argue that:

A) expansionary fiscal and monetary policy can reduce unemployment without creating inflation.
B) a trade-off exists between unemployment and inflation even in the long run.
C) the only long-run impact of a change in monetary policy is a higher price level.
D) the long run aggregate supply curve is upward sloping.
E) when a change is correctly anticipated, expansionary fiscal policy changes real output.