The Rational Expectations Equilibrium Approach

question 23

Multiple Choice

The rational expectations equilibrium approach

• A)attempts to build macroeconomic theory on microeconomic foundations
• B)was first proposed by Gregory Mankiw
• C)implies that policy changes always significantly affect output since people understand how it works
• D)assumes that disturbances caused by real shocks are long in duration since they have to work their way through different markets
• E)was developed in the 1960s, but was given little attention since most economists rejected the idea of rational expectations

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