The Rational Expectations Hypothesis Is Based on the Assumption That

question 268

Multiple Choice

The rational expectations hypothesis is based on the assumption that

• A) individuals combine effects of past policy actions with their own judgment about future policy effects and changes when forming their expectations.
• B) individuals adapt in response to past policy actions and changes without looking ahead when forming their expectations.
• C) firms pay above equilibrium wages to their employees.
• D) most firms operate in a less than competitive environment.

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Definitions:

Kilmann-Saxton Culture-Gap

A theoretical framework that describes the mismatches or gaps that can exist between the actual organizational culture and the optimal culture for maximizing performance.

Long-Term Human Orientation

An approach that emphasizes the importance of long-term relationships, sustainability, and ethical treatment of individuals within organizational or social contexts.

Social Relationships

Connections between individuals that are influenced by social networks, norms, and interactions.

Justifications

Reasons or explanations provided to support or rationalize decisions, actions, or beliefs.