Which of the Following Statements Is Consistent with the Rational

question 221

Multiple Choice

Which of the following statements is consistent with the rational expectations hypothesis?

• A) When it comes to making personal economic decisions, people rarely behave in a rational manner.
• B) 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.
• C) When it comes to making personal economic decisions, people always behave in a rational manner.
• D) Every person in the economy is always correct in her predictions about current and future policy changes.

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Definitions:

Low Level

Refers to processes, operations, or phenomena that are basic, fundamental, or close to the underlying mechanism or hardware.

High Level

A term often used to describe actions, decisions, or concepts that are complex, abstract, or involve broad oversight or influence.

Coping Methods

Coping methods are strategies or techniques that individuals use to manage or mitigate stress and emotional discomfort.

Emotional

Related to feelings or expressions of emotion, often indicating a person's mood or affective state.