The Rational Expectations Hypothesis Implies That Discretionary Macropolicy May Be

question 18

Multiple Choice

The rational expectations hypothesis implies that discretionary macropolicy may be

• A) relatively effective in both the short run and long run.
• B) relatively effective in the short run but ineffective in the long run.
• C) relatively ineffective both in the short run and long run.
• D) effective in the long run since decision makers will continually make predictable, systematic errors.

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