The Rational Expectations Equilibrium Approach to Macroeconomics

Multiple Choice

The rational expectations equilibrium approach to macroeconomics

A) stresses the importance of market imperfections in determining the outcome of macroeconomic policies
B) asserts that monetary policy can do little to affect output or unemployment unless it is unanticipated
C) implies that macroeconomic policy works only when the public completely understands it
D) ignores the microeconomic decision making process of households and firms
E) was first developed in the 1960s but was soon discarded since most economists believed that it is unimportant to incorporate microeconomic foundations into macroeconomics