Which of the following is true about rational expectations?
a. People form expectations on the basis of information about past as well as future actions of policy makers.
b. Wage agreements do not reflect inflationary expectations if workers expect continued inflation
c. Rational people cannot easily anticipate the effects of discretionary policy on the price level and output.
d. The role of expectations is applicable in the context of monetary policy only.
e. The effectiveness of a particular government policy is independent of people's expectations.
a
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When the Fed ________ interest rates, bond prices ________
A) raises; do not change B) raises; rise C) lowers; rise D) lowers; do not change
All of the following are factors that will shift the supply curve except
A) a change in production technology. B) changing tastes and preferences. C) a change in the price of substitutes in production. D) a change in the number of producers.