The Theory of Rational Expectations Calls for Monetary Policy Rules

question 39

Multiple Choice

The theory of rational expectations calls for monetary policy rules because

• A) of past policy errors.
• B) policy tends to be countercyclical.
• C) of the inability to time policy decisions.
• D) of the reaction of the public to the expected effects of policy.

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Definitions:

Better Performance

An improvement in efficiency, accuracy, or quality of work or activity when compared to a previous level.

Positive Well-Being

Refers to a state of health, happiness, and prosperity, encompassing both physical and mental health.

Disappointing Event

An occurrence that falls short of expectations, leading to feelings of dissatisfaction or sadness.

Relationship

The way in which two or more concepts, objects, or people are connected, or the state of being connected.