According to the Lucas' Rational Expectations Approach

Multiple Choice

According to the Lucas' rational expectations approach,

A) people may not always forecast accurately, but they do not make systematic errors
B) anticipated changes in money supply have no real effect on output
C) unanticipated changes in money supply have only a short-lived effect on output and are soon reflected in a proportional price change
D) nominal wages are set on the basis of expected prices, and if expectations are wrong, output and employment will be affected
E) all of the above