The Rational Expectations Hypothesis Suggests That If Wages and Prices

Multiple Choice

The rational expectations hypothesis suggests that if wages and prices are flexible

A) unanticipated monetary policy actions can shift the long-run aggregate supply curve but cannot shift the aggregate demand curve.
B) anticipated monetary policy actions can affect nominal variables, but not real variables.
C) unanticipated monetary policy actions can affect real variables, but not nominal variables.
D) growth in the money supply can alter real variables only if the growth is anticipated.