The Rational Expectations Hypothesis Implies That When Macroeconomic Policy Changes

question 12

Multiple Choice

The rational expectations hypothesis implies that when macroeconomic policy changes

• A)the economy will become highly unstable.
• B)the way expectations are formed will change.
• C)people will be slow to catch on to the change.
• D)people will make systematic mistakes.

---

Definitions:

Refracted

A process by which the direction of a wave or ray changes as it passes obliquely from one medium into another in which its speed is different.

Reflected

The process whereby light or other waves are bounced back from a surface without being absorbed.

Interface

The boundary or point where two different systems, subjects, or phenomena meet and interact.

Deep Conditions

Refers to the environment conditions such as high pressure and temperature found in the Earth's interior or deep underwater.