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.

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Definitions:

Autonomous

The capacity to make decisions independently, free from external control or influence, often highlighting self-governance.

Orienting Principles

Fundamental concepts or assumptions that guide thinking, research, or policy in various fields.

Therapeutic Factor

An element or aspect of therapy that contributes to the healing process or beneficial outcomes for the person receiving treatment.

Hope

A feeling of expectation and desire for a particular thing to happen, often associated with motivation and optimism.