Which of the Following Is an Implication of Rational Expectations

question 40

Multiple Choice

Which of the following is an implication of rational expectations theory?

• A)Deviations of output from the natural rate are likely to be serious and long-lived.
• B)The economy is like a complex machine, that needs to be optimally controlled with the proper policy.
• C)Macroeconometric models based on past behavior will not be very useful in formulating policy.
• D)Wages and prices are set almost entirely at random, so it is pointless to try to model their behavior.
• E) Business cycles almost always result from a shift in aggregate demand.

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Definitions:

Well-written Goals

Objectives that are clearly defined, achievable, measurable, relevant, and time-bound, enhancing focus and direction.

Components

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The rivalry among businesses to attract customers and achieve market share.