The Rational Expectations Hypothesis Indicates That People

question 58

Multiple Choice

The rational expectations hypothesis indicates that people

• A) pay little attention to policy when forming their expectations about the future.
• B) expect the next period to be pretty much like the recent past, regardless of policy changes.
• C) will always be able to forecast the future accurately.
• D) change their expectations about the future if policy changes.

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Definitions:

Efficiency

The ability to accomplish a task using the least amount of resources possible.

Calculability

The ability to assess or measure something quantitatively, often used in the context of evaluating efficiency, productivity, or performance.

Secondary Groups

These refer to groups characterized by formal, impersonal relationships and often have a specific goal or activity at their core.

Primary Groups

Small, close-knit, and often long-term social groups characterized by face-to-face interaction, deep emotional bonds, and a strong sense of loyalty.