The Main Policy Conclusion of the Rational Expectations School Is

question 148

Multiple Choice

The main policy conclusion of the rational expectations school is that:

• A)fiscal policy lags are so long and variable that such policy is worthless,but monetary policy can be helpful.
• B)monetary policy lags are so long and variable that such policy is worthless,but fiscal policy can be helpful.
• C)both monetary and fiscal policy can be helpful if policy makers correctly anticipate the plans of firms and households.
• D)both monetary and fiscal policy can be helpful if firms and households correctly anticipate the plans of policy makers.
• E)neither monetary nor fiscal policy can be helpful if firms and households correctly anticipate the plans of policy makers.

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Definitions:

Fair Value Adjustment

Fair value adjustment involves altering the reported value of a company's assets or liabilities to reflect their current market values.

Investment Revenue

Income earned from various investments like stocks, bonds, or real estate.

Unrealized Loss

A loss that results from holding an asset that has decreased in value, but the asset has not yet been sold.

Fair Value Adjustment

A financial accounting process of adjusting the fair market value of assets and liabilities.