Rational expectations refer to
A. the use of all available information in forecasting economic variables.
B. the use of aggregate supply to forecast unemployment.
C. the use of opportunity costs to forecast inflation.
D. disinflation.
A. the use of all available information in forecasting economic variables.
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Suppose you cash in a Certificate of Deposit (a small time deposit) to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?
A) M1 and M2 both increase. B) M1 stays the same and M2 increases. C) M1 increases and M2 decreases. D) M1 increases and M2 stays the same.
According to classical economists, excessive unemployment does not persist in the economy because
A. the labor demand does not change in the economy. B. the labor supply does not change in the economy. C. interest rates always change to insure equilibrium in the money market. D. wages will always adjust to ensure equilibrium in the labor market.