The Rational Expectations Hypothesis Implies That When Macroeconomic Policy Changes

question 12

Multiple Choice

The rational expectations hypothesis implies that when macroeconomic policy changes

• A)the economy will become highly unstable.
• B)the way expectations are formed will change.
• C)people will be slow to catch on to the change.
• D)people will make systematic mistakes.

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Definitions:

Positivist Perspective

A philosophical approach that emphasizes empirical data and scientific methodology to understand and explain social phenomena.

Constructionist Perspective

A theoretical approach that suggests realities are socially constructed through human interpretation and interaction.

Definitions

Explanations of the meanings of words or phrases, especially in a specific context or field.

Falsely Labeled

The situation of being inaccurately or wrongly categorized, which can impact an individual's self-identity and how they are treated by others.