Question: Use the diagram from problem 2 and indicate a. which movement would correspond to an unanticipated expansionary government policy in the short run. b. which

Use the diagram from problem 2 and indicate

a. which movement would correspond to an unanticipated expansionary government policy in the short run.

b. which movement would correspond to an unanticipated contractionary government policy in the short run.

c. which movement would correspond to a completely anticipated expansionary government policy, under rational expectations.

d. which movement would correspond to a completely anticipated contractionary government policy in the short run.

e. what would happen if an expansionary government policy occurred, but its inflationary effects were smaller than they were expected to be.

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