Assume That Many Households and Businesses Reduce Their Spending Only

question 128

Multiple Choice

Assume that many households and businesses reduce their spending only because they expect other households and consumers to reduce their spending.Also suppose that all households and consumers would be better off if they did not reduce their spending.This situation best describes the

• A)real-business-cycle theory.
• B)rational expectations theory.
• C)concept of coordination failures.
• D)adaptive expectations theory.

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