The Hypothesis That People Know the "True Model" of the Economy

question 70

Multiple Choice

The hypothesis that people know the "true model" of the economy and that they use this model to form their expectations of the future is the

• A) real business cycle hypothesis.
• B) Lucas supply function hypothesis.
• C) rational-expectations hypothesis.
• D) Laffer hypothesis.

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Definitions:

Reinforcement Value

The subjective attractiveness or desirability of a reward, which influences the likelihood of repeating the behavior that led to that reward.

Observational Learning

The process of learning by watching the actions and outcomes of others' behavior, then imitating or avoiding similar actions.

Classical Conditioning

A learning process in which a neutral stimulus becomes associated with a meaningful stimulus and acquires the capacity to elicit a similar response.

Operant Conditioning

A method of instruction by which a behavior's force is adjusted by means of rewards or consequences.