Which Statement Best Characterizes the Theory of Rational Expectations

question 44

Multiple Choice

Which statement best characterizes the theory of rational expectations?

• A) It suggests that estimates of the sacrifice ratio should be used to guide policy.
• B) It concerns how people use information to predict the future.
• C) It explains why the long-run Phillips curve is vertical.
• D) It explains how people act when there is unemployment and workers must be rationed.

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Definitions:

Learned Helplessness

The situation in which someone feels powerless, due to experiencing a traumatic incident or repeated failures to accomplish goals.

Implications

Possible results or effects of an action or decision, often indirect or not immediately obvious.

Internal Locus

The belief that one has control over their own life and outcomes, as opposed to external forces having that control.

Physically Abused

Experiencing harm or injury to the body inflicted by another person.