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.

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