Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland. We would expect to observe
A) a decrease in aggregate supply and an increase in aggregate demand.
B) a decrease in both real output and the natural rate of unemployment.
C) a decrease in real output and an increase in the natural rate of unemployment.
D) a decrease in real output and an increase in the price level.
Correct Answer:
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Q185: According to the real business cycle theory,
Q186: Under the assumption of rational expectations, people's
Q187: According to the real business cycle theory,
Q188: The rational expectations hypothesis states that
A) individuals
Q189: The idea that anticipated monetary policy changes
Q191: Which statement is TRUE when rational expectations
Q192: If people do NOT always make the
Q193: According to the real-business-cycle perspective
A) the economy
Q194: Which statement is TRUE when rational expectations
Q195: The policy irrelevance proposition implies that
A) unanticipated
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