The Lucas Supply Function, in Combination with the Assumption That

Multiple Choice

The Lucas supply function, in combination with the assumption that expectations are rational, implies that

A) neither anticipated monetary policy changes nor anticipated fiscal policy changes will have an effect on real output.
B) an anticipated monetary policy change will have an effect on real output, but an anticipated fiscal policy change will not have an effect on real output.
C) both anticipated monetary and fiscal policy changes will affect real output.
D) an anticipated monetary policy change will have no effect on real output, but an anticipated fiscal policy change will have an effect on real output.