The Theory of Rational Expectations Concludes That

question 160

Multiple Choice

The theory of rational expectations concludes that

• A)discretionary policies are more effective than rules in stabilizing the economy.
• B)discretionary fiscal policy is a more powerful stabilization device than is discretionary monetary policy.
• C)discretionary monetary policy is a more powerful stabilization device than is discretionary fiscal policy.
• D)since expectations can leave discretionary stabilization policies ineffective,it is better to rely upon policy rules.

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Definitions:

Justify

To align text evenly along the left and right margins, creating a clean and professional appearance in a document.

Tone

The attitude or emotional quality conveyed by an author or speaker through word choice and writing style.

Explicit Attitude

A clearly expressed or openly declared view or stance on a particular topic or issue.

Credibility

The perceived reliability and truthfulness of an individual or entity, often grounded in their track record and expertise.