The Rational Expectations Hypothesis Implies That Discretionary Macropolicy May Be

question 133

Multiple Choice

The rational expectations hypothesis implies that discretionary macropolicy may be

• A)relatively ineffective,even in the short run.
• B)relatively effective in the short run but ineffective in the long run.
• C)effective both in the short run and long run.
• D)effective in the long run because decision makers will continually make systematic,predictable errors.

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Definitions:

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor incurred to produce goods, including utilities, depreciation, and maintenance of equipment.

Underapplied

A situation in cost accounting where the allocated manufacturing overhead costs are less than the actual overhead expenses incurred.

Overapplied

A condition in costing where the allocated or applied costs exceed the actual costs incurred.

Adjusted Cost

The revised basis of an asset for tax purposes after adjusting for factors such as depreciation or improvements.