One Economic Theory States That People Combine the Effects of Past

question 69

Multiple Choice

One economic theory states that people combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes,and react accordingly.This theory is known as the

• A)relevance hypothesis.
• B)contrary opinion hypothesis.
• C)rational expectations hypothesis.
• D)structural hypothesis.

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Definitions:

Determination

In the context of statistical analysis, often refers to the degree of variance in observations explained by the model, usually in the form of the coefficient of determination (R-squared).

Estimated Regression Equation

An equation that estimates the relationship between dependent and independent variables in a regression model.

SST

Total Sum of Squares; a measure that quantifies the total variance in the dependent variable that is to be explained by the independent variable(s) in a model.

SSE

Stands for the Sum of Squared Errors, a measure used in statistics to describe the discrepancy between the data and an estimation model.