Which of the Following Is True of Rational Expectations

question 57

Multiple Choice

Which of the following is true of rational expectations?

• A) People form expectations on the basis of information about past as well as future actions of policy makers.
• B) Wage agreements do not reflect inflationary expectations if workers expect continued inflation.
• C) Rational people cannot easily anticipate the effects of discretionary policy on the price level and output.
• D) The role of expectations is applicable only in the context of monetary policy.
• E) The effectiveness of a particular government policy is independent of people's expectations.

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Definitions:

Inflammatory Process

The body's biological response to harmful stimuli, such as pathogens or damaged cells, characterized by redness, swelling, pain, and heat.

Biliary Atresia

A condition in newborns involving the blockage or absence of bile ducts, leading to liver damage.

Jaundice

A condition characterized by yellowing of the skin and the whites of the eyes, often due to liver dysfunction.

Hepatomegaly

An abnormal enlargement of the liver, which can indicate liver disease or heart failure.