What are rational expectations? What is the difference between adaptive expectations and rational expectations? How might rational expectations make monetary policy ineffective? Explain why monetary...

difference between adaptive expectations and

rational expectations?

How might rational expectations make monetary

policy ineffective?

Explain why monetary policy might be effective if

expectations are rational but a change in policy is

a surprise.

If expectations are rational, explain how

anticipated and unanticipated demand shocks

will affect real GDP.

Are there reasons to doubt the policy

ineffectiveness proposition? Briefly explain.