According to the new classical theory, if the public correctly anticipates a government policy to increase aggregate demand, then a. there will be both a long-run and a short-run tradeoff between inflation and unemployment. b. there may be a short-run tradeoff between inflation and unemployment, but one cannot say for certain whether there will be a long-run tradeoff. c. there will be neither a long-run nor a short-run tradeoff between inflation and unemployment. d. there will be a short-run tradeoff between inflation and unemployment, but there will not be a long-run tradeoff. e. there will be a long-run tradeoff between inflation and unemployment, but there will not be a short-run tradeoff.

Rate of return douglas keel, a financial analyst for orange industries, wishes to estimate the rate of return for two similar-risk investments, x and y. douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. a year earlier, investment x had a market value of $27 comma 000; and investment y had a market value of $46 comma 000. during the year, investment x generated cash flow of $2 comma 025 and investment y generated cash flow of $ 6 comma 770. the current market values of investments x and y are $28 comma 582 and $46 comma 000, respectively. a. calculate the expected rate of return on investments x and y using the most recent year's data. b. assuming that the two investments are equally risky, which one should douglas recommend? why?