When a Person Bases Her Future Expectations for the Economy

question 165

Multiple Choice

When a person bases her future expectations for the economy on all available current data and her own judgment about future policy effects, this is known as

• A)the policy irrelevance proposition.
• B)rational expectations.
• C)irrational expectations.
• D)the new classical theory.

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Definitions:

Total Compensation

The complete package of salary, benefits, bonuses, and any other form of remuneration given to an employee.

Exporting Industry

A sector of a country's economy that produces goods or services for sale abroad.

Imported Good

A product or service that is brought into one country from another and offered for sale.

Exported Good

A product manufactured in one country but shipped and sold abroad, contributing to a country's foreign trade balance.