The Notion That Expectations Can Significantly Influence Macroeconomic Activity

question 41

Multiple Choice

The notion that expectations can significantly influence macroeconomic activity

• A) is an innovation of the rational expectations theorists.
• B) is true, but only in the context of random, uncontrollable effects.
• C) was introduced as a systematic influence that could be exploited by policy as early as the 1930s by Keynes.
• D) is inconsistent with the core of practical macroeconomics.
• E) none of the above.

---

Definitions:

Unsecured Bonds

Bonds issued without collateral, relying solely on the issuer's creditworthiness.

Debentures

A type of long-term debt instrument used by corporations and governments to raise funds, not secured by physical assets or collateral.

Convertible Participating Bond

A type of bond that gives the holder the right to convert it into a specified number of shares of the issuing company and to participate in earnings beyond a specified amount.

Corporate Earnings

The profit a company makes after deducting its operating expenses and taxes, indicative of its financial health.