Multiple Choice
According to the theory of rational expectations, expansionary fiscal policy that is anticipated will:
A) cause wage expectations to adjust downward immediately following the lower price level.
B) increase the real wage rate in the long run.
C) cause a permanent decline in the natural rate of unemployment.
D) decrease the real wage rate in the long run.
E) cause wage expectations to adjust upward immediately following the higher price level.
Correct Answer:
Verified
Correct Answer:
Verified
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