If the effects are fully anticipated, what impact is expansionary monetary policy most likely to have on real economic activity? a. little or no impact b. large expansionary impact c. moderate expansionary impact
A…Due to full anticipation.
A - Long Term (as per classical economics) C - Short Term, assuming it’s an unusual and temporary shock done by a monetary authority with enough credibility to stop it when it’s done. (what with price-stickiness and Keynesian economics) My guess is that the question is thinking in the long term and is trying to point towards the whole “long-term neutrality of money”
In my professional opinion A is the best answer Watch that be Wrong HAHAHAHA
Second Chung. Nothing happens if it is fully anticipated.
A LRAS stays constant, just at a higher price level assuming inflation comes through as expected.
A Anticipation will remove any variances before the actual action commences.
Had to think about it but it is A.