The Theory of Rational Expectations Concludes That

question 70

Multiple Choice

The theory of rational expectations concludes that

• A)the public's expectations can influence the outcome of monetary policy but not of fiscal policy.
• B)the public's expectations can influence the outcome of fiscal policy but not of monetary policy.
• C)the public's expectations as to the effects of economic policies tends to reinforce the effectiveness of those policies.
• D)by reacting in its self-interest to the expected effects of stabilization policy, the public tends to negate the impact of those policies.

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Definitions:

Sensory Neurons

Nerve cells that transmit sensory information (e.g., touch, sound, pain) from the body to the central nervous system.

Gray Matter

A part of the brain and spinal cord made primarily of neuronal cell bodies, dendrites, and unmyelinated axons, playing a key role in processing and regulating neural signals.

Cortex

The outer layer of an organ or structure, such as the cerebral cortex of the brain, which is involved in high-level functions including memory, attention, perception, awareness, thought, language, and consciousness.

Deep Cerebral Nuclei

Clusters of neurons in the deep regions of the cerebrum involved in regulating voluntary movement and learning.