The Theory of Rational Expectations Concludes That

question 70

Multiple Choice

The theory of rational expectations concludes that

• A)the public's expectations can influence the outcome of monetary policy but not of fiscal policy.
• B)the public's expectations can influence the outcome of fiscal policy but not of monetary policy.
• C)the public's expectations as to the effects of economic policies tends to reinforce the effectiveness of those policies.
• D)by reacting in its self-interest to the expected effects of stabilization policy, the public tends to negate the impact of those policies.

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Definitions:

Superego

A component of Sigmund Freud's psychoanalytic theory, representing the moral conscience and ethical standards of the psyche.

Psychic Energy

A concept in psychoanalytic theory referring to the force behind human behaviors, thoughts, and feelings originating from innate instincts and drives.

Moral Judgments

Decisions or evaluations about the rightness or wrongness of actions, often based on a set of ethical principles or societal norms.

Phallic Stage

The third stage in Freud's theory of psychosexual development, occurring around age 3 to 6, where the focus of the libido is on the genital area.