The Rational Expectations Hypothesis Is Based on All the Following

question 140

Multiple Choice

The rational expectations hypothesis is based on all the following assumptions EXCEPT

• A) use of judgment about effects of future policy actions.
• B) use of knowledge of effects of past policy actions.
• C) understanding of how the economy operates.
• D) understanding that prices are sticky.

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Definitions:

Fertility

The natural capability to produce offspring, often discussed in the context of individuals, populations, or soil.

Fluid Intelligence

The ability to reason logically and find solutions in new scenarios, regardless of previously gained knowledge.

Memory Capacities

The maximum amount of information that can be stored in the memory system, involving short-term and long-term storage abilities.

Declines

Decreases in quality, quantity, or importance; a movement downwards or a reduction.