Proponents of the Theory of Rational Expectations Contend That

question 128

Multiple Choice

Proponents of the theory of rational expectations contend that:

• A) people make rational forecasts using all existing information.
• B) business cycles are generally caused by shifts in aggregate demand.
• C) full employment is rarely achieved.
• D) stickiness of prices is the primary cause of inflation.

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Definitions:

Unit Cost

Unit cost represents the total expense incurred to produce, store, and sell one unit of a product or service, including all variables and fixed costs.

Period Cost

Costs that are not directly associated with the production of goods and are expensed in the accounting period in which they are incurred.

FIFO Method

"First In, First Out," an inventory valuation method where the oldest items are recorded as sold first.

Units Started And Completed

The number of units that have been both initiated and finished within a specific accounting period, relevant in manufacturing and production processes.