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If households and firms have rational expectations is it possible for the unemployment rate to exceed the natural rate of unemployment Explainational expectations

 If households and firms have rational expectations, is it possible
for the unemployment rate to exceed the natural rate of unemployment?
Explain.
2. Assume people and firms have rational expectations. Explain
how each of the following events will affect aggregate output
and the price level.
a. The Fed unexpectedly decreases the required reserve ratio.
b. Congress passes a tax reduction bill which will go into effect
in one year and last for ten years.
c. The Fed announces it will decrease the supply of money.
d. Without notice, OPEC cuts oil production by 50 percent.
e. The government passes a previously unannounced emergency
defense spending bill, authorizing an immediate
$500 billion increase in funding.

Apr 30 2020 View more View Less

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