The Theory of Rational Expectations Calls for Monetary Policy Rules

question 63

Multiple Choice

The theory of rational expectations calls for monetary policy rules because:

• A) Of past policy errors
• B) Policy tends to be countercyclical
• C) Of the inability to time policy decisions
• D) Of the reaction of the public to the expected effects of policy

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Definitions:

Procedural Due Process

A legal doctrine in the United States that requires government officials to follow fair procedures before depriving a person of life, liberty, or property.

Fair Hearing

An impartial and open hearing where both parties have the opportunity to present their case, evidence, and arguments before a decision is made.

Constitution

The fundamental and supreme law of a nation or state, establishing the framework for its government and the basic principles and laws that govern the society.

Rational Basis Review

The lowest standard of judicial review that examines whether a law is "rationally related" to a legitimate government interest.