Which of the Following Is NOT an Inference of the Rational

question 321

Multiple Choice

Which of the following is NOT an inference of the rational expectations hypothesis?

• A) Government policy actions have no real effects in the short run unless the actions are unanticipated.
• B) Government policy actions have no real effects in the long run.
• C) Government policy actions that are anticipated have no real effects in the short run.
• D) Government policy actions that are unanticipated have no monetary effects in the short run.

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Definitions:

Short-Term Capital Losses

Financial losses realized from the sale of an asset held for a year or less, which can be used to offset capital gains and reduce taxable income.

Capital Asset

Any type of asset that is held for investment or for personal use, including stocks, bonds, real estate properties, and collectibles, among others.

Taxpayer

An individual or entity legally obligated to pay taxes to a governmental authority, such as the IRS.

Section 1231

A tax provision that allows for the favorable tax treatment of gains on the sale or exchange of certain types of property used in a business.