One of the Primary Assumptions of the Rational Expectations Model

question 22

Multiple Choice

One of the primary assumptions of the rational expectations model is that

• A) labor and product markets are highly competitive.
• B) people expect others to behave irrationally.
• C) labor markets exhibit short-term stickiness.
• D) prices do not adjust quickly to expansionary policies.

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Definitions:

Process Costing

An accounting methodology used for uniform and continuous production, assigning costs based on the process or stages goods go through.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods.

Assembly Department

A section of a manufacturing facility where components are put together to form a finished product.

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, not directly attributable to a specific product.