If Expectations Are Rational

question 56

Multiple Choice

If expectations are rational,

• A)a predictable change in inflation can make the expected inflation rate deviate from the actual rate.
• B)unemployment can exceed the full-employment rate even in the long run.
• C)the difference between the actual inflation rate and the expected inflation rate must be a purely random number.
• D)the inflation rate cannot be reduced without a period of high unemployment because the Phillips curve is downward sloping.

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Definitions:

Model

A representation, often simplified, of a system or phenomenon, used for analysis, interpretation, or to guide decisions.

Self-efficacy

Refers to an individual's belief in their capacity to execute behaviors necessary to produce specific performance attainments.

Task-specific

This term refers to skills, abilities, or strategies that are particularly relevant to, and used for, accomplishing a specific task.

Self-efficacy

An individual's belief in their own capacity to execute behaviors necessary to produce specific performance attainments.