What Did Proponents of Rational Expectations Argue About the Sacrifice

question 190

Multiple Choice

What did proponents of rational expectations argue about the sacrifice ratio and why?

• A) The sacrifice ratio would be high because it was rational for people not to immediately change their expectations.
• B) The sacrifice ratio would be high because people might adjust their expectations quickly if they found anti-inflation policy credible.
• C) The sacrifice ratio could be low because it was rational for people not to immediately change their expectations.
• D) The sacrifice ratio could be low because people might adjust their expectations quickly if they found anti-inflation policy credible.

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Definitions:

Personal Frustration

The feeling of dissatisfaction or disappointment arising from obstacles that hinder one's goals or desires, often leading to stress or conflict.

Self-determination Theory

A theory of motivation that is concerned with supporting our natural or intrinsic tendencies to behave in effective and healthy ways.

Competence

The ability or skill to perform a task effectively or to a satisfactory standard.

Distress

The effect of unpleasant and undesirable stressors.