According to Rational Expectations Theory, Discretionary Monetary and fiScal Policy

question 129

Multiple Choice

According to rational expectations theory, discretionary monetary and fiscal policy will be ineffective primarily because of the

• A) successes of macroeconomic policymakers
• B) inability of policymakers to time decisions properly.
• C) reaction of the public to the expected effects of policy changes.
• D) slow impact of policy to stimulate changes in real output and employment.

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Definitions:

Multiple Regression Analysis

A method in statistics that employs multiple predictor variables to estimate the result of a dependent variable.

SSE

Sum of Squared Errors, a measure of the discrepancy between the data and an estimation model, indicating the total deviation of data points from the fitted values.

Estimated Income

An approximation of the amount of money expected to be earned over a specific period.

Yearly Income

The total amount of money earned or received over one year.