Which of the Following Economic Theories Takes into Account the Rational

question 25

Multiple Choice

Which of the following economic theories takes into account the rational expectations of people in the economy?

• A)Traditional Keynesian economic theory
• B)Monetarist economic theory
• C)New classical economic theory
• D)Classical economic theory
• E)New Keynesian economic theory

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Definitions:

Consumer Surplus

The differential between the overall amount consumers are willing and financially prepared to spend on a good or service, and what they end up spending.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, essentially the extra benefit to producers from selling at the market price.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unobtainable.

Producer Surplus

The difference between the amount that producers are willing to accept for a good or service and the actual amount they receive.