Consider an economy with many monopolistically competitive firms. If those firms face “menu costs” in adjusting prices, then even under the rational expectation hypothesis, an expected change in money supply can affect the level of output in the short-run.
is this true or false?Macroeconomics true or false question?
false. Under the rational expectation hypothesis, people would expect the change in price and therefore there woul be no change in quantity.
I am pretty sure, not positive though/.
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