The Main Criticism Leveled at the Rational Expectations School of Economic

question 240

Multiple Choice

The main criticism leveled at the rational expectations school of economic thought is that

• A)they assume too much influence due to monopoly power.
• B)they just go too far in ascribing rationality to the general population.
• C)the assumption that the velocity of circulation is predictable in the short run is not borne out by the facts.
• D)the assumption that labor union contracts create a rigid wage structure is unrealistic.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Automatic Stay

A legal provision that halts all lawsuits, foreclosures, and collection activities against a debtor the moment a bankruptcy petition is filed.

Creditor

An individual or institution that lends money or extends credit to another party, known as the debtor.

Lien

A legal right or interest that a lender holds in the debtor's property, serving as security for the repayment of a debt.