What Is the Main Policy Conclusion of the Rational Expectations

question 50

Multiple Choice

What is the main policy conclusion of the rational expectations school?  

• A) Fiscal policy lags are so long and variable that such policy is worthless, but monetary policy can be helpful. 
• B) Monetary policy lags are so long and variable that such policy is worthless, but fiscal policy can be helpful. 
• C) Both monetary and fiscal policy can be helpful if firms and households correctly anticipate the plans of policymakers. 
• D) Neither monetary nor fiscal policy is helpful if firms and households correctly anticipate the plans of policymakers.

---

Definitions:

Lifelong Openness Hypothesis

The theory suggesting that maintaining an openness to new experiences can contribute to personal growth and well-being throughout an individual's life.

Ingratiation Tactic

A social strategy employed to make oneself more likable to others.

Complimenting

Expressing praise, admiration, or approval towards someone, often enhancing positive interpersonal relations and self-esteem.

Foot-In-The-Door Tactic

A persuasion strategy involving getting a person to agree to a small request to increase the likelihood of agreeing to a larger request later.