According to the Rational Expectations Theory

question 23

Multiple Choice

According to the rational expectations theory,

• A) on average people have very little idea of what to expect from government policy makers.
• B) people form expectations by focusing only on the private sector.
• C) people do not consider likely government policies when forming expectations.
• D) people form expectations, in part, by considering the probable future effects of changes in government policy.

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Definitions:

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A mental state achieved by focusing one's awareness on the present moment, often used as a therapeutic technique.

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Theory that all people adapt their behaviors to others to some extent.