Which Statement Best Characterizes the Theory of Rational Expectations

question 44

Multiple Choice

Which statement best characterizes the theory of rational expectations?

• A) It suggests that estimates of the sacrifice ratio should be used to guide policy.
• B) It concerns how people use information to predict the future.
• C) It explains why the long-run Phillips curve is vertical.
• D) It explains how people act when there is unemployment and workers must be rationed.

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Definitions:

Major Heading

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Informative Heading

A title or headline designed to clearly and succinctly convey the main topic or subject of the content that follows.

Conclusion

The final part of a document or speech that summarizes the main points or presents the final outcome.

Context

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