Those Who Accept Both the Rational Expectations Hypothesis and the Assumption

question 111

Multiple Choice

Those who accept both the rational expectations hypothesis and the assumption of flexibility of wages and price would likely argue that

• A) saving and investment do not contribute to economic growth.
• B) active policy making does not contribute to economic stability.
• C) if policy makers are willing to accept a high inflation rate, they can reduce unemployment to a point below the natural rate.
• D) policy makers can eliminate fluctuations in the level of business activity with careful planning of a widely publicized monetary policy.

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Definitions:

Jet Lag

A temporary sleep disorder that occurs when a person's internal body clock is out of sync with the time cues in a new time zone, often experienced after long flights across multiple time zones.

René Descartes

A 17th-century French philosopher, mathematician, and scientist who is often considered the father of modern philosophy. He is best known for his statement, "I think, therefore I am."

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology, known for his concepts of the collective unconscious and archetypes.