The Rational Expectations Hypothesis States That

question 228

Multiple Choice

The rational expectations hypothesis states that

• A)individuals always behave rationally.
• B)prices do not adjust in a downward direction.
• C)past and present economic information is incorporated into decision making.
• D)consumers do not understand the effects of monetary and fiscal policy.

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Definitions:

Nonsense Syllables

Meaningless sets of two consonants with a vowel sandwiched in between, used in memory and learning experiments.

Cued Recall

A memory retrieval process in which a person successfully recalls information with the help of prompts or cues.

U.S. Presidents

The elected head of state and government in the United States, serving a four-year term.

Human Memory

The capacity of the human brain to store, retain, and recall information, experiences, and procedures, including facts and past events.