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The Rational Expectations Hypothesis Indicates That a Monetary Policy Designed

Question 257

Multiple Choice

The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless


A) there are unanticipated changes in the money supply.
B) wages and prices are flexible.
C) labor unions have long-term contracts.
D) changes in the money supply are completely anticipated.

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