True or False:
1. Rational expectations economists tend to believe that people anticipate the results of government policy moves.
2. If people’s expectations instantly and accurately reflected the likely result of government policy changes, the SRAS and LRAS curves would be the same.
3. Rational expectations models assert that in an effort to protect themselves from a higher anticipated inflation rate, workers ask for higher wages, suppliers increase input prices, and producers raise their product prices.
4. Rational expectations economists believe that wages and prices are relatively rigid.
5. Rational expectations theory suggests that government economic policies have limited effectiveness. As a result, monetary and fiscal policy will affect output and employment only if people are fooled by policy moves.
6. Real business cycle theorists believe the business cycle is primarily caused by aggregate demand shocks.
7. According to real business cycle theorists, rapid productivity growth causes economic expansions and productivity slowdowns cause recessions.
8. Unexpected productivity improvements would tend to increase both real wages and average hours worked.
9. The occurrence of productivity shocks tends to change the marginal productivity of labor, real wages, average hours worked, and the level of investment all in the same direction.
10. In real business cycle theory, shocks change the long-run aggregate supply curve rather than leading real output to deviate from the long-run aggregate supply curve.