The Rational Expectations Hypothesis Implies That Discretionary Macropolicy May Be

question 18

Multiple Choice

The rational expectations hypothesis implies that discretionary macropolicy may be

• A) relatively effective in both the short run and long run.
• B) relatively effective in the short run but ineffective in the long run.
• C) relatively ineffective both in the short run and long run.
• D) effective in the long run since decision makers will continually make predictable, systematic errors.

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Definitions:

Inductive Reasoning

A method of reasoning in which specific observations or data are used to make a broader generalization.

Sociological Study

The examination of social behaviors, structures, and functions through various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity.

Stereotype

An oversimplified set of beliefs about the members of a social group or social stratum that is used to categorize individuals of that group.

Secondary Data

This refers to data that has been previously collected and analyzed by someone else, and is then used for a new research project.