Which of the Following Is False

Multiple Choice

Which of the following is false?

A) Rational expectations theory suggests that government economic policies designed to alter aggregate demand to meet macroeconomic goals are of very limited effectiveness, because when policy targets become public, people will alter their own behavior from what it would otherwise have been, and in so doing, they largely negate the intended impact of policy changes.
B) If changes in inflation surprise people, they will have little effect on unemployment or real output in the short run.
C) An unanticipated increase in AD as a result of an expansionary monetary policy stimulates real output and employment in the short run, but an anticipated increase in AD does not.
D) Unanticipated increases in AD expands output and employment in the short run, but only increases the price level in the long run.
E) None of the above are false; all are true.