The Keynesian Hypothesis Assumes That People Know the "True Model

question 274

True/False

The Keynesian hypothesis assumes that people know the "true model" of the economy and form their expectations of the future based on this model.

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Definitions:

Credit Enhancements

Strategies or financial products used to improve the credit worthiness of a financial transaction, reducing the risk for investors.

Warrants

Call options issued by a company allowing the holder to buy a stated number of shares of stock from a company at a specified price. Warrants are generally distributed with debt, or preferred stock, to induce investors to buy those securities at a lower cost.

Option

A contract that gives its holder the right to buy or sell an asset at some predetermined price within a specified period of time.

Sweetener

A feature that makes a security more attractive to some investors, thereby inducing them to accept a lower current yield. Convertible features and warrants are examples of sweeteners.