Which of the Following Is True About Rational Expectations

question 82

Multiple Choice

Which of the following is true about rational expectations?

• A)People form expectations on the basis of information about past as well as future actions of policy makers.
• B)Wage agreements do not reflect inflationary expectations if workers expect continued inflation.
• C)Rational people cannot easily anticipate the effects of discretionary policy on the price level and output.
• D)The role of expectations is applicable in the context of monetary policy only.
• E)The effectiveness of a particular government policy is independent of people's expectations.

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