Rational Expectations Theory Allows for Temporary Changes in Output Due

question 214

True/False

Rational expectations theory allows for temporary changes in output due to expansionary policy,
whereas adaptive expectations theory holds that no such changes in output could occur.

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Definitions:

Broaden-and-build Theory

A psychological model suggesting that positive emotions expand one's awareness and inspire novel, varied, and exploratory thoughts and actions.

Positive Emotions

Feelings that are enjoyable and pleasurable, such as happiness, joy, or love, which contribute to positive well-being.

Differentiated

To be distinguished or made distinct in nature or qualities from others, often referring to products, services, or market segments.

Affective Forecasting

The process of predicting one's future emotional states or the emotional impact of future events.