Proponents of the Theory of Rational Expectations Contend That

question 128

Multiple Choice

Proponents of the theory of rational expectations contend that:

• A) people make rational forecasts using all existing information.
• B) business cycles are generally caused by shifts in aggregate demand.
• C) full employment is rarely achieved.
• D) stickiness of prices is the primary cause of inflation.

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Definitions:

Pause

A temporary stop or delay in action or speech, often used for effect, consideration, or to break between ideas.

Steady Rate

A consistent pace or level of progress over time, without significant fluctuation.

Discriminative Stimulus

A specific stimulus in the presence of which a particular response is more likely to be reinforced.

Trick or Treating

A Halloween custom for children who dress in costume and solicit candy or other treats door-to-door with the question, "Trick or treat?"