Proponents of Rational Expectations Theory Have Argued That, in the Most

question 163

Multiple Choice

Proponents of rational expectations theory have argued that, in the most extreme case, if policymakers are credibly committed to reducing inflation, and if rational people understand that commitment and quickly lower their inflation expectation, the sacrifice ratio could be as small as what?

• A) 0
• B) 1
• C) 3
• D) 5

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Definitions:

Social Sciences

The branch of science devoted to the study of societies and the relationships among individuals within those societies.

Lobbying Group

An organization that seeks to influence political decisions in favor of their interests or cause.

Parliament

The supreme legislative body in a country, typically consisting of a lower house (e.g., House of Representatives) and an upper house (e.g., Senate), responsible for making laws.

Foot-In-The-Door Technique

A persuasive strategy that involves getting a person to agree to a small request as a means of eventually getting them to comply with a larger request.