The Rational Expectations Hypothesis Implies That Discretionary Macro-Policy Will

question 91

Multiple Choice

The rational expectations hypothesis implies that discretionary macro-policy will:

• A)be ineffective, even in the short run.
• B)be effective in the short run but ineffective in the long run.
• C)be effective both in the short run and long run.
• D)make it possible to trade-off a higher rate of inflation for a lower rate of unemployment.

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