In Cagan Model an unannounced future increase in the money supply will lead to an increase in current prices under:

a.

All these answers are correct

b.

None of these answers is correct

c.

Adaptive expectations

d.

Static expectations

e.

Rational expectations

Question 10

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Question text

In the Lucas' Imperfect Information Model, an expected fall in money supply will ____ prices and ____ output in the short-run.

a.

Decrease; Decrease

b.

Decrease; Increase

c.

All these answers are correct

d.

Increase; Decrease

e.

None of these answers is correct

f.

Increase; Increase